#RBS Morgans Says Buy Warrnambool Cheese & Butter

Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email

Investors seeking a way into Australian dairy stocks have been encouraged by broker RBS Morgans to buy takeover target Warrnambool Cheese & Butter Factory Co.WCB.AU +3.06%
 
The company, which has fielded a takeover offer from Bega Cheese Ltd.BGA.AU +1.11%, recommended Wednesday that shareholders reject the offer which values Warrnambool at 349 million Australian dollars (US$328 million).
 
RBS Morgans analyst Belinda Moore on Thursday upgraded Warrnambool to Outperform from Neutral and lifted her price target to A$6.97 a share, a 10.3% premium to Bega’s current cash-and-stock offer.
 
Ms. Moore said Bega’s offer represents 8.3 times fiscal 2014 enterprise value to earnings before interest, tax, depreciation and amortization, a discount to the 8.7 times multiple that has been applied to recent dairy transactions. These include China’s Bright Food (Group) Co.’s acquisition of a 75% stake in Manassen Foods Australia Pty Ltd in 2011; and Kirin Holdings Co.2503.TO +1.44%’s acquisition of one of Australia’s biggest milk processors Dairy Farmers in 2008.
 
“Warrnambool believes (and we concur) that the synergies are materially higher,” said Ms. Moore, who believes the cheese-and-butter maker is justified in rejecting Bega’s offer.
 
“We see the strategic merit of the combined group and if successful, expect it to be a core mid-cap holding [as] it will be a larger, liquid dairy company exposed to attractive industry fundamentals,” she added. The combined group is projected to annually produce 353,000 tons of dairy products like cheese, butter and cream and process 1.6 billion litres of milk.
 
RBS Morgans believes Bega’s appeal as a takeover target itself would also increase, due to its larger presence as an exporter, which would be compelling for a buyer seeking to secure dairy supply.
 
Notably, closely held Murray Goulburn, which owns 17% of Warrnambool, is yet to show its cards. In 2010, Murray Goulburn proposed a merger with Warrnambool, before withdrawing its A$4.35-a-share offer before it was cleared by Australia’s competition regulator. Australian press reports at the time said Canada’s Saputo Inc. had earlier approached Warrnambool with a A$4.00-a-share offer.
 
Source: WSJ

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas