Dairy wars heat up as more companies embroiled
New Zealand's Fonterra became the latest group to enter the field on Thursday, with the dairy giant snapping up a 6 per cent stake in Bega Cheese after the market closed.
The play, worth $75 million, brings the fight over assets full circle, with Bega responsible for the opening salvo in a bidding war that escalated over Warrnambool Cheese & Butter, a dairy processor on Victoria's western coast. Warrnambool remains in play, but must now compete for attention on a global stage with its NSW counterpart, Bega, a speculated target itself.
Canadian dairy major Saputo is currently the highest bidder for Warrnambool, with a cash offer of $8 a share.
That offer was complicated this week when Japanese brewer and dairy company Kirin bought a 10 per cent stake in the Victorian company through its Lion subsidiary.
PAC Partners agribusiness analyst Paul Jensz said Saputo could be eyeing Bega as an alternative foothold in the Australian milk export market.
"You'd think that a group like Saputo would be looking at their plan B, C and D now if Warrnambool doesn't come to pass," he said.
"At least half of Bega is quite similar to Warrnambool's export business, so that would be an alternative."
An adviser for Bega, David Williams, of Kidder Williams, played down the advance by Fonterra.
"There's a lot of interest in Bega. Is that speculation of a takeover? Maybe," he said.
"Do people think we're a good investment if we take over Warrnambool? I think so."
He said Fonterra had boosted the company's confidence in acquiring Warrnambool.
"It gives us more value for a takeover," he said.
Shares in Bega shot up 9.5 per cent on Friday, to close at $4.83. Any attempt at a takeover would require a change to Bega's constitution, which limits shareholders to a 10 per cent stake.
Mr Jensz said Fonterra's stake gave Bega more firepower to up its bid on Warrnambool, currently worth $7.74 a Warrnambool share. Murray Goulburn has offered $7.50 a share in cash.
"Fonterra have effectively said they want to align themselves with Bega - not Warrnambool - in a domestic expansion plan," he said.
"So that strengthens Bega's hand."
Shares in Warrnambool fell 3¢ to close at $8.27 on Friday.
Bega said it would hold a board meeting next week to discuss its next move.
Late on Thursday, Fonterra picked up 9.3 million shares for $4.95 a share for a total cost of $46 million. The NZ company is believed to be looking for as much as a 10 per cent stake in Bega.
Fonterra chief executive Theo Spierings said Australia was an important market for New Zealand's biggest company. It was committed to growing an already strong presence across the Tasman, he said.
"There has recently been a lot of consolidation activity in the Australian dairy industry," Mr Spierings said.
"It is important that Fonterra participates, and we have confidence in Bega and the strategy it is pursuing."
Frequently Asked Questions about this Article…
The Australian dairy industry is experiencing intense competition, with several major companies vying for control over key assets. This includes a bidding war for Warrnambool Cheese & Butter, involving companies like Fonterra, Saputo, and Kirin.
The Australian dairy industry is experiencing intense competition, with several companies, including some of the world's largest dairy players, vying for control over local assets. This has led to a series of takeover bids and strategic investments.
Fonterra acquired a 6% stake in Bega Cheese to strengthen its position in the Australian dairy market and align itself with Bega's domestic expansion plans, rather than competing for Warrnambool.
Fonterra acquired a 6% stake in Bega Cheese as part of its strategy to strengthen its presence in the Australian market. This move aligns with Fonterra's commitment to participating in the ongoing consolidation within the Australian dairy industry.
Bega Cheese's shares increased by 9.5% to close at $4.83, following Fonterra's investment and the ongoing interest in the company's potential takeover of Warrnambool.
Bega Cheese's stock saw a significant increase, rising by 9.5% to close at $4.83, following Fonterra's acquisition of a stake in the company. This reflects investor confidence in Bega's potential for growth and strategic positioning.
Saputo is currently the highest bidder for Warrnambool with an $8 per share offer. However, the situation is complicated by Kirin's recent acquisition of a 10% stake in Warrnambool, which could influence the outcome.
Saputo, a Canadian dairy giant, is currently the highest bidder for Warrnambool Cheese & Butter with an $8 per share offer. This bid is part of Saputo's strategy to establish a foothold in the Australian milk export market.
Kirin, through its Lion subsidiary, has acquired a 10% stake in Warrnambool, adding complexity to the bidding war and potentially impacting Saputo's offer.
Kirin's acquisition of a 10% stake in Warrnambool through its Lion subsidiary adds complexity to the bidding war, as it introduces another major player into the mix, potentially influencing the outcome of the takeover.
Bega Cheese's strategy, supported by Fonterra's investment, enhances its position in the bidding war for Warrnambool, potentially increasing its value and attractiveness as a takeover target.
Bega Cheese is both a participant and a potential target in the ongoing dairy asset battle. It initiated the bidding war for Warrnambool and is now speculated to be a target itself, with interest from companies like Fonterra and possibly Saputo.
Warrnambool could be acquired by Saputo, Bega, or another interested party, depending on how the bidding war unfolds and the strategic moves by involved companies like Fonterra and Kirin.
Fonterra sees strategic advantages in aligning with Bega Cheese due to Bega's strong export business, which is similar to Warrnambool's. This alignment could enhance Fonterra's domestic expansion plans in Australia.
The Australian dairy market is attractive due to its strong export potential and recent consolidation activities, making it a strategic target for international companies like Fonterra and Saputo.
Bega Cheese's upcoming board meeting will likely discuss its next strategic moves in light of recent developments, including Fonterra's investment and the ongoing competition for Warrnambool. The outcomes could influence Bega's future direction and market positioning.
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