Bega Cheese (BGA) has decided to sell its 18.8 per cent stake in Warrnambool Cheese and Butter Factory Ltd to Saputo Inc, putting the Canadian company on the cusp of taking control of the Victorian dairy producer with a stake of about 45%.
The New South Wales cheese maker’s decision to sell its 10,519,881 Warrnambool shares to Saputo at $9 a share will enable Bega to make an initial profit of about $66 million.
Bega, which made public its decision to sell its shares to Saputo through the ASX, ended a bid to acquire Warrnambool last month.
Merger arbitrage funds, which have between 10% and 15% of Warrnambool’s shares, are likely to follow Bega and sell their stakes to Saputo. Such hedge funds sales to Saputo would give the Montreal-based company a majority stake in Warrnambool.
Murray Goulburn, whose $9.50-a-share Warranambool takeover offer is dependent on acquiring a 50.1% stake, may also follow Bega and the hedge funds by selling its 17.7% Warrnambool stake to Saputo.
That will result in an even bigger pay out for those Warrnambool shareholders selling to Saputo. Saputo has offered shareholders $9.20 a share if its Warrnambool stake rises above 50%, $9.40 a share if its shareholding rises to more than 75% and as much as $9.60 a share if its stake increases to more than 90%.
Kirin Holdings, whose unit Lion holds a 9.99 per cent Warrnambool stake, wants to keep its Warrnambool stake. Warrnambool’s Allansford factory produces more than 10,000 tonnnes of cheese annually for Lion and the company views its stake in Warrnambool as “strategic”.
Saputo's $9 a share takeover offer closes at 1900 AEST next Wednesday, January 22.