ASX-listed dairy company Bega Cheese will purchase Lion Dairy and Drinks from Japan’s Kirin for $534 million.
Emerging from a week-long trading halt, Bega Cheese said the deal would be complete by January.
In November 2019, Kirin had lined up a $600 million deal with China’s Mengniu Dairy. However, the deal was blocked on national interest grounds by Treasurer Josh Frydenberg.
Canadian dairy conglomerate Saputo and financial firm Tanarra Capital were also bidders until recently.
But now Lion, the owner of Pura Milk, Dare iced coffee, Vitasoy, Yoplait yoghurt and Australia’s largest national cold supply chain network, will fall into Australian hands.
Nine Media reported Bega was provided with detailed financial information about Lion late last week and talks between the two companies continued through this week.
On Thursday, Bega Cheese, which was advised by Kidder Williams, said it hoped to raise $401 million by offering 87 million new shares to make the purchase.
The new shares will be $4.60 and 180 million worth will be offered to the market, while $220 million will be made available to existing shareholders.
Existing shareholders who take up the offer to buy more shares will be able to purchase one additional share for every four and a half they currently own and will not be able to transfer them to another investor.
Bega Cheese sources fresh milk from suppliers across southern NSW and throughout northern and south-west Victoria.
The acquisition of Lion expands that to include farmers in Western Australia, South Australia, Tasmania and south-east Queensland.
Bega announced an opening farmgate milk price of $6.75 kilograms per milk solids (kg/MS), while Lion’s Victorian suppliers were offered $6.52 kg/MS.
Past acquisitions racking up legal bills
Bega purchased a range of Kraft productions from Mondelez International in 2017, including Vegemite and peanut butter, for $460 million.
The company has since spent $15.2 million in a legal battle with US-based Kraft, which is seeking to stop Bega from using the well-known jars and yellow lid synonymous with Kraft products.
The full court of the Federal Court sided with Bega Cheese in that matter, but Kraft-Heinz has decided to appeal that decision in the High Court of Australia.
A separate move by Bega to replace the Kraft logo with a Bega one on jars of peanut butter, macaroni cheese and similar products kicked off a second legal fight with New Zealand dairy giant Fonterra.
That matter is still awaiting judgment in the Supreme Court of Victoria.