Warrnambool Cheese and Butter has welcomed Bega’s decision to sell its 18.8 per cent stake in the company to Saputo.
Bega made the announcement yesterday, after dropping out of the bidding war for Warrnambool last month.
Canadian dairy giant Saputo says it has now increased its shareholding in Warrnambool to 46.17 per cent, edging closer to a majority shareholding which will also lift the price it pays for WCB shares from $9 to $9.20.
The chief executive of WCB, David Lord, has long backed Saputo to take control of the company, and says the bidding war may be over soon.
“Clearly they are getting very close to a plus-50 per cent position and, once they reach that point, that is a significant threshold in this process, and would seem to signal the beginning of the end in this whole process I would think,” he said.
Saputo’s purchase price for WCB will go up to $9.60 a share if more than 90 per cent of shareholders agree to sell before the Canadian company’s offer closes at 7:00pm on Wednesday.
David Lord says it is pleasing to see such an increase in Saputo’s holding ahead of the offer closing next week.
“With the 22nd of January, which is the closing date of the Saputo offer, looming, we’d be disappointed if all WCB shareholders didn’t participate in the offer and won’t enjoy what is a really significant price premium over the WCB share price, as it was at the beginning of this process,” he added.
Bega Cheese says it will make a pre-tax and pre-costs profit of between $61.8 and $68.2 by selling its shares to Saputo, depending on how many other shareholders accept the takeover bid.
Bega’s chairman Barry Irvin says he does not think the process will spark a similar bidding war for Bega.
“Bega Cheese is not for sale. I believe that the levels of protection we’ve got in our constitution make a hostile takeover very challenging and I think that people would observe that given the ins and outs of the Warrnambool bid,” he said.
“I think people would be very careful around what their corporate strategy around the Australian dairy industry and corporate plays there might be.”
Mr Irvin says Bega has plenty of organic growth potential, but may consider other acquisition possibilities if opportunities arise.
“The business itself has great opportunities and we we’ve been talking in recent times about a major investment at Lagoon Street in Bega, which I think will be very good for the business,” he observed.
“But we also see that there are other acquisitions and consolidations that might be an opportunity for us.”