Lion's share threatens Warrnambool deal
Japanese-owned brewer and dairy company Kirin bought a 10 per cent stake in WCB through its Lion subsidiary on Tuesday, complicating efforts by the three companies vying for control of the prized dairy group.
Shares in Warrnambool fell 5 per cent to close at $8.36 on Wednesday, after rising to $9.30 on Tuesday.
On Wednesday, Canadian dairy major Saputo issued its bidding statement to Warrnambool shareholders. Its offer of $8 per share has been unanimously backed by the Warrnambool board over earlier offers by Bega Cheese and Murray Goulburn, both major shareholders in the target.
Bega Cheese and Murray Goulburn maintain their efforts to take over the company. While Lion has claimed it does not intend to make an offer for Warrnambool, its stake splits WCB between three major shareholders and potentially creates a roadblock for other suitors.
Adding to shareholder angst is an impending decision, expected on Thursday, by the Australian Competition and Consumer Commission on whether an earlier takeover proposal by Bega Cheese can proceed.
Analysts said the 10 per cent stake in WCB would give Lion a seat at the table on decisions about the company's future, should all other major shareholders agree to the Saputo offer. This could lead to a messy ownership structure that would be difficult to bring under one umbrella.
RBS Morgans analyst Belinda Moore said it was still likely that other takeover offers would emerge.
"You've got three strategic shareholders on register now," she said.
"These guys have 10, 18 and 17 per cent. Saputo has the highest offer, but both Bega and Murray Goulburn have the right to increase their stake over the coming days."
Bega, which started the bidding battle with an initial takeover offer, maintained it was best positioned to take over the company, given it was closer to regulatory approval.
Lion's strategic stake in WCB safeguards its cheese deal with the dairy group. Warrnambool makes all Lion's flagship entry-level cheese brands, namely Cracker Barrel and Coon, at its Allansford plant.
Frequently Asked Questions about this Article…
Warrnambool Cheese and Butter shares fell by 5% due to concerns that Lion's 10% stake could deter Saputo from pursuing its offer, creating uncertainty in the market.
Lion's 10% stake complicates the takeover efforts by splitting Warrnambool between three major shareholders, potentially creating a roadblock for other suitors like Saputo, Bega Cheese, and Murray Goulburn.
The major players in the takeover bid for Warrnambool Cheese and Butter are Saputo, Bega Cheese, and Murray Goulburn, with Lion holding a strategic 10% stake.
Saputo has made an offer of $8 per share for Warrnambool Cheese and Butter, which has been unanimously backed by the Warrnambool board over earlier offers from Bega Cheese and Murray Goulburn.
Lion's stake in Warrnambool Cheese and Butter safeguards its cheese deal with the dairy group, as Warrnambool produces Lion's flagship cheese brands like Cracker Barrel and Coon at its Allansford plant.
The Australian Competition and Consumer Commission is expected to make a decision on whether Bega Cheese's earlier takeover proposal can proceed, which adds to the uncertainty for shareholders.
Yes, analysts believe it is still likely that other takeover offers could emerge, given the strategic interests of the major shareholders and the competitive nature of the bidding process.
Bega Cheese believes it is best positioned to take over Warrnambool because it is closer to obtaining regulatory approval compared to other bidders.
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