Warrnambool Cheese and Butter Factory coveted by mystery bidder

Posted by Daniel Palmer on 8th December 2009

Victorian-based dairy firm Warrnambool Cheese and Butter Factory (WCB) has received an unsolicited confidential takeover proposal.

The company said they would resist the current offer, believing it not to be in the best interests of shareholders.

“The indicative proposal is incomplete, non binding and subject to a number of conditions,” the ASX-listed firm advised in a statement. “After taking advice from professional advisers, the Board has informed the third party that the indicative proposal does not incorporate appropriate value to reflect the strong prospects of the company and it cannot be recommended to shareholders in its current form.”

“Accordingly, there is no certainty that any transaction will eventuate and the Board recommends that shareholders take NO ACTION in respect of their shareholdings in WCB on this issue.”

The company also took the opportunity to reiterate an improving forecast after coming through a tumultuous year that saw dairy markets crash and several Board members stepping down in the wake of a backlash from suppliers and a cancelled capital raising.

“The prospects for WCB have improved significantly in the past six months. The company has recovered all of the milk supply volume lost in early 2009 and the Allansford plant is currently operating close to full capacity,” they said. “Dairy business conditions have also improved markedly, with global dairy prices recovering more than 50% in Australian dollar terms since August 2009.”

“In addition, WCB continues to pursue significant growth and investment opportunities, including Great Ocean Ingredients (which has now been commissioned and is operating profitably) and Sungold retail milk (which continues to grow profitable market share).”

WCB shares jumped on the news, currently over nine per cent up on a flat day for the market.