Yes, there’s been more action in the great three-way Australian milk auction.
Bega (BGA) has added more cheese to its offer for Warrnambool Butter and Cheese (WCB) and the result is that its new offer is only 30c below the $9 a share cash offer tossed on the table Wednesday by bigger rival, Murray Goulburn.
Bega yesterday increased its share offer for WCB from 1.2 to 1.5 Bega shares plus $2 cash and declared its offer unconditional.
But Bega shares fell 2.8% to $4.45 yesterday after the higher bid was announced in the morning.
BGA vs WCB YTD – Bega lifts bid, shares fall
Warrnambool shares were steady on $9.10.
This takes Bega’s bid to $8.67 based on current prices.
At one stage yesterday the Bega offer was worth $8.90, but BGA shares were sold off in the afternoon.
The improved Bega offer and move to go unconditional means that it has the only live bid on the table.
Murray Goulburn’s bid hinges on approval from Australia’s competition regulator, which could take three months, while the other suitor, Canada’s Saputo needs to secure at least 50.1% of WCB’s stock for its bid to be successful.
Sitting on the Warrnambool share register is Lion Nathan, which controls National Foods (Pura Milk) and Dairy Farmers, with a stake of just over 9%.
Bega owns around 18% of Warrnambool and Murray Goulburn has a similar stake.
Warrnambool directors don’t want to know Bega and have claimed from the start that the bid overvalues Bega’s shares.
But with the only live bid on the table, Warrnambool directors will have to look again.
At the moment they support Saputo’s offer, and have so far ignored the two bids from Murray Goulburn.
Fonterra of NZ (the world’s biggest dairy group) owns around 6% or so of Bega.
Could Bega, Fonterra and Lion Nathan eventually get together and split up Warrnambool?
Another possibility is that Fonterra comes in with a bid of its own after buying Bega’s stake in Warrnambool.
As it now stands, Bega, Murray Goulburn and Lion Nathan can stop any bid being successful.
The trio control around 45% of Warrnambool. A deal that divides up the target company looks the most likely outcome.
Bega said it will pay brokers a handling fee for acceptances form Warrnambool shareholders – that’s a form of financial encouragement to brokers to get their clients to accept cost free.
