Bega Cheese (BGA) is launching a $160 million capital raising to tidy up its balance sheet and give it the flexibility to advantage of any targets that come into its sights.
Its offer was announced in Friday and will be topped today by Link’s expected multi-million dollar offering.
Unlike Link which has a big deal in the UK to pay for, Bega is building up its financial strength, and to give the balance sheet a better look after more than $600 million in deals earlier in the year.
Bega’s issue when complete will see the company’s market value jump well past $1 billion for the first time.
It was valued at $A908 million on Thursday at the close. Bega shares are up more than 40% year to date.
Bega started 2017 by paying $460 million in January for Vegemite and other brands. It also sold an infant formula plant and spray dryers to US group, Mead Johnson for $200 million which helped pay for the Vegemite deal.
It says it will use the proceeds of the raising to improve financial flexibility to take advantage of future growth opportunities in dairy and food.
The company wants to raise about $122.5 million from an institutional placement, and another $37.5 million from a share purchase plan open to all existing shareholders.
“This capital raising gives us the financial strength and flexibility to grow our dairy and food businesses as part of our vision to be a great Australian food company,” executive chairman Barry Irvin said in a statement.
The institutional placement offer is for 22.9 million shares priced at $5.35 each, which represents a 10.1% discount to Thursday’s closing price of $5.95. The new shares under the share purchase plan will be priced at $5.25.
Bega also confirmed its full-year guidance (for 2016-17) for earnings before interest, tax, depreciation and amortisation of about $67.4 million.
