Bega acquires 15% share of Warrnambool Cheese & Butter
Bega Cheese has acquired a 15% stake in its rival, Warrnambool Cheese & Butter, with Bega Cheese executive chairman Barry Irvin joining the WCB board, and the two companies forming a strategic management group to “explore and evaluate opportunities for mutually beneficial cooperation”.
The $22.6 million placement – 6 million shares at $2.90 – is part of a total capital raising of $37 million, is accompanied by a one-for-six share offer to WCB shareholders, and the issue of 7.7 million further new shares at a price of $2.50 per share. Earlier this year, WCB rejected a takeover offer at $4.50 a share from dairy giant Murray Goulburn.
“We welcome Bega Cheese as a cornerstone investor in WCB,” said WCB Chairman Frank Davis.
“Bega Cheese has a similar background to WCB and shares with similar values, with both businesses committed to paying competitive milk prices to suppliers, while generating a good return on shareholders’ funds. We believe our two businesses are complementary, and expect our management teams to indentify many potential areas for cooperation to the mutual benefit of all stakeholders.”
“The cornerstone investment by Bega Cheese, together with the entitlement offer, will allow WCB to reduce significantly its debt and provide capital to pursue further growth options,” he said.
Bega Cheese Executive Barry Irvin, who will join the WCB board after completion of the placement, said that WCB represented a highly attractive opportunity to invest in the Australian dairy industry.
“Bega Cheese is impressed with the efforts of WCB’s management team in turning around the business after difficult trading conditions in 2009,” he said.
“We look forward to supporting WCB in its pursuit of future growth opportunities, and to working collaboratively with WCB through the proposed strategic managment group.”