Warrnambool Cheese & Butter Factory has increased its campaign for shareholders to reject a $370 million takeover bid from Bega Cheese, rallying investors to ignore the offer it has labelled inadequate and inferior to a takeover proposal from Canadian dairy group Saputo.
The dairy group has also set its sights on the potentially booming infant formula market in Asia, saying it would use its infrastructure and dairy brands to take advantage of expected strong demand for the baby product in the region.
The rejection of the takeover offer contained in WCB’s Target’s Statement builds on the independent expert report from KPMG released this week that tagged the Bega offer of 1.2 Bega shares and $2 cash per WCB share as “neither fair nor reasonable”.
The plea to its own shareholders to reject Bega’s advances hails straight from the takeover defence playbook and comes as WCB continues to cosy up to Saputo, which is offering $7 cash a share.
Saputo’s offer values the 125-year-old Victorian dairy group at $390 million.
In its Target’s Statement, WCB also sought to plump up its value by outlining several strategic and business improvement initiatives that it claims will build a portfolio of higher-margin dairy products.
These include a recent deal between it and the Tatua Cooperative of New Zealand, under which Tatua will license WCB to use its intellectual property for the extraction and processing of lactoferrin from milk. Lactoferrin is used in infant formulations.
WCB also said it intended to launch Sungold-branded cream cheese into the export market through an exclusive agreement with global player Kraft.
Warrnambool closed down 1¢ to $7.21. Bega was down 2¢ to $3.83.