BEGA Cheese may be in play. Investment bankers on Melbourne’s Collins Street and their counterparts in Sydney are trying to position themselves to advise on a potential takeover offer for the NSW cheesemaker.
Bega’s shares have gained 47 per cent since its September 12 takeover offer for Warrnambool Cheese & Butter, a $330 million increase in Bega’s market value.
About $48m of the increase in Bega’s market value can be attributed to the increase in the value of its 18 per cent stake in Warrnambool, whose shares have more than doubled in value.
But the rise in Bega’s market value, say bankers and corporate lawyers, is because the market now considers the company as potentially the next takeover target amid expectations of consolidation in the Australian dairy industry that includes Warrnambool and Bega.
The world’s biggest dairy exporting co-operative, New Zealand’s Fonterra, has seen the potential of an investment in Bega by buying 6 per cent of the company at the end of October.
Murray Goulburn Co-operative managing director Gary Helou has made no secret of his desire to become a bigger dairy industry player and wants to be Australia’s answer to Fonterra. Helou is competing with Bega to try to acquire Warrnambool. But if that bid fails, he could set his sights on Bega.
Like Bega, Murray Goulburn has an 18 per cent stake in Warrnambool and Helou could sell his Warrnambool shares to Bega and take a shareholding of about 8 per cent in Bega, from which he could launch a takeover.
Similarly, Saputo, which is also battling Bega and Murray Goulburn for Warrnambool, could turn on the NSW company and launch a takeover offer.
«Bega is not for sale and if Saputo were to attempt it they would need the help of the Canadian Mounties,» said David Williams of Kidder Williams, the investment bank advising Bega.
At the moment, Bega’s constitution prevents any one shareholder taking a stake of more than 10 per cent. But if a takeover offer were launched at a premium to Bega’s share price, 75 per cent of Bega’s shareholders might vote to change the constitution.
Bega’s shares fell 5c to $4.62, valuing its Warrnambool takeover offer of 1.5 of its shares plus $2 cash at $8.93. Warrnambool rose 5c to $9.28.
Source:The Australian
