Bega Cheese sells Warrnambool stake to takeover rival Saputo

New South Wales-based Bega Cheese announced yesterday that it has agreed to sell its 18.8% stake in WCB to Saputo. On 13 January, Saputo said it controlled around 26.5% of WCB shares. Yesterday’s agreement will take Saputo’s interest in WCB to at least 45.3%.

Saputo’s current offer stands at A$9 ($7.92, €5.82) per share if it acquires less than 50% of WCB, A$9.20 ($8.10, €5.95) per share if it gets between 50% and 90%, and A$9.60 ($8.45, €6.21)if it gets more than 90%.

In a statement posted on the Australian Securities Exchange (ASX) website, Bega said that it expects to receive between A$94.7m ($83.3m, €61.3m) and A$101m ($88.9m, €65.3m) from the sale of its shares, and realise profit before tax and costs of between A$61.8m ($54.4m, €40m) and A$68.2m ($60m, €44.1m).

Saputo’s current offer closes on 22 January - giving it less than a week to increase its current interest in WCB from 45.3% to a majority stake. 

Bega Cheese “disappointed”​

WCB, which manufactures a wide range of dairy products for the Australian market and export, became the unexpected subject of a three-way bidding war between Saputo, Bega Cheese, and Australian dairy cooperative Murray Goulburn late last year.

Bega Cheese, which manufactures a variety of cheese products for domestic sale and export, initiated the battle to acquire WCB on 12 September 2013 with a cash and share bid worth A$5.78 ($5.09, €3.74) per WCB share.

Saputo entered the race to acquire WCB on 7 October 2013, and was followed shortly after by Murray Goulburn. Since Bega’s initial bid, the price of WCB shares has shot up - from A$4.51 ($3.97, €2.92) to A$9.35 ($8.23, €6.05).

In its ASX statement, Bega Cheese said that it is “disappointed it could not realise its vision to combine WCB and Bega Cheese.”​

“It was Bega Cheese’s strong preference for WCB to remain Australian owned and operated, either through acceptance of Bega Cheese’s bid or Murray Goulburn’s bid. The Bega Cheese Board is conscious of the significant value of the WCB shareholding and its obligation to its shareholders to continue to make sensible investment and capital management decisions," ​said the company.

“In the end, this is a better financial outcome for Bega Cheese and its shareholders than a successful takeover at the current bid value.”​

MG assessing “ramifications”​

Bega Cheese added in its statement that the “risk in continuing to hold its WCB shareholding until the Australian Competition Tribunal’s decision regarding Murray Goulburn’s takeover…was too great.”​

Murray Goulburn, which controls a 17.7% stake in WCB, is awaiting a ruling by the Australian Competition Tribunal as to whether it can proceed with its A$9.50 ($836, €6.15) per share cash offer.

But with Saputo’s offer set to close on 22 January, regulatory approval may come too late.

In a statement posted on its website earlier today, Murray Goulburn said that it is keeping an eye of “the situation.”​

“MG will assess the ramifications of this development as it relates to MG’s bid for WCB and also MG’s 17.7% shareholding in WCB, and will continue to monitor the situation as it evolves,” ​said the statement