Warrnambool prepares for takeover battle

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WARRNAMBOOL Cheese & Butter Factory is preparing to mount a vigorous defence to Bega Cheese’s $320 million takeover offer, with its initial response bearing a striking resemblance to its rejection of previous suitor, Murray Goulburn, almost four years ago.

While the Victoria-based dairy company is still reviewing the details of last week’s unsolicited bid, the dubbing of the defence mandate internally as «Project Wall» appears to suggest that it is less than impressed with the prospect of being taken over.
Describing the offer as «highly opportunistic», Warrnambool Cheese & Butter chairman Terry Richardson yesterday advised shareholders to take no action until the company released its official target’s statement in mid-October — two weeks after Bega’s off-market offer is due to open.
Warrnambool is in the process of seeking an independent opinion on its finances that will take into account its future prospects, including several projects aimed at boosting its exposure to China’s booming infant formula market.
Mr Richardson, who was elevated to the chairman’s role last month, said several business improvement initiatives were contributing to an improved product mix, higher margins and earnings diversification across the group.
«Directors will assess these factors as we consider whether Bega’s offer adequately reflects the value of the . . . business today, the expected future earnings uplift from the initiatives currently under way and the improving market conditions,» Mr Richardson said in a letter to shareholders, which was released to the market yesterday.
«Given the highly favourable outlook for (the company), we consider the timing of the offer to be highly opportunistic.»
The comments would have come as little surprise to followers of Australia’s oldest dairy company, which has been long considered a takeover target due to its prized assets and relative under-performance in recent years.
They also closely echo comments made by Warrnambool Cheese & Butter in late 2009 to justify the rejection of takeover approaches from several companies that were later revealed to be Murray Goulburn and Canadian group Saputo.
Those offers were also described as «opportunistic» and not reflective of «medium and long-term prospects», while the company insisted that «recent initiatives to diversify into higher margin products» were beginning to have a «material positive impact».
Warrnambool warded off a takeover and its earnings rebounded in 2011 when it posted a profit of $18.5m.
Its financial performance has since declined, however, with profit slumping by more than 50 per cent to $7.5m last year.
While Warrnambool Cheese & Butter has not released specific guidance for the 2013-14 financial year, analysts expect earnings to improve. The current consensus is for operating earnings of $38.3m, up from $23.8m.
Bega, which already has an 18 per cent stake in the company, is offering 1.2 of its own shares plus $2 cash for every Warrnambool Cheese & Butter share it does not already own. The offer was pitched at a 30 per cent premium and values the target company at $6.15.
Warrnambool shares have continued to rise in recent days, last closing at $6.05.
 
Source: The Australian

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.

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