Dairy godmother

14 November 2013 By Ethan Bilby

Bega Cheese hiked its offer for local rival Warrnambool to A$486 mln. That’s nearly double the dairy’s value before a bidding war erupted in September. Valuations depend on Chinese milk demand taking off. But with two other buyers still in the fight, the price could rise further.

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Australian dairy Bega Cheese raised its cash and stock offer to buy rival Warrnambool on Nov. 14.
Bega is now offering 1.5 of its own shares and A$2 in cash for each Warrnambool share, up from its initial offer on Sept. 12 of 1.2 shares and A$2 in cash.
Bega shares were trading at A$4.45, down 3 percent, by 2 p.m. (GMT 0300) Australian time on Nov. 14. At that level, its offer values each Warrnambool share at A$8.68, putting a value of A$486 on the whole company.
Bega’s bid is the latest development in a three-way takeover battle that has caused Warrnambool’s shares to more than double in two months.
On Nov. 13, a second bidder, Australian dairy cooperative Murray Goulburn said it would raise its offer to buy Warrnambool to A$9 a share in cash, valuing the target at about A$505 million. The bid is conditional on receiving approval from Australian competition regulators.
Both proposals have surpassed that of Canadian dairy giant Saputo, which raised its bid for Warrnambool to A$8 per share on Oct. 25.
Bega already owns 18 percent of Warrnambool, while Murray Goulburn owns a 17 percent stake. On Oct. 29, Kirin subsidiary Lion announced it had bought a 10 percent stake in Warrnambool for A$51.45 million.
Warrnambool shares fell slightly to A$9.09 by 2 p.m. (GMT 0300) Australian time.

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