Bega's $370m bid 'inferior', says Warrnambool
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.
Frequently Asked Questions about this Article…
Warrnambool Cheese & Butter Factory is rejecting Bega Cheese's $370 million takeover bid because they consider it inadequate and inferior compared to a competing offer from Canadian dairy group Saputo. The independent expert report from KPMG also labeled Bega's offer as 'neither fair nor reasonable.'
Saputo's offer values Warrnambool Cheese & Butter Factory at $390 million, offering $7 cash per share, which is considered more attractive than Bega's bid.
Warrnambool Cheese & Butter Factory plans to increase its value by outlining several strategic and business improvement initiatives. These include a deal with Tatua Cooperative for lactoferrin extraction and processing, and launching Sungold-branded cream cheese into the export market through an agreement with Kraft.
Lactoferrin is a protein found in milk that is used in infant formulations. Warrnambool Cheese & Butter Factory has a deal with Tatua Cooperative to license its intellectual property for lactoferrin extraction and processing, which is part of their strategy to tap into the booming infant formula market in Asia.
Warrnambool Cheese & Butter Factory aims to capitalize on the strong demand for infant formula in Asia by using its infrastructure and dairy brands to enter this potentially booming market.
Following the takeover news, Warrnambool's stock closed down 1 cent to $7.21, while Bega's stock was down 2 cents to $3.83.
The independent expert report from KPMG plays a crucial role by providing an objective assessment of Bega's offer, which it deemed 'neither fair nor reasonable.' This supports Warrnambool's stance in rejecting the bid.
Warrnambool's agreement with Kraft is significant because it allows them to launch Sungold-branded cream cheese into the export market, which is part of their strategy to build a portfolio of higher-margin dairy products.
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