WCB to acquire Lion’s cheese business
Victorian-based dairy business Warrnambool Cheese and Butter (WCB) has announced it has entered into an agreement to acquire the everyday cheese business of Japanese-owned Lion, which is based in Victoria.
The purchase price of $137.5 million, on a debt-free basis, includes $106.5 million, which WCB said represents the value of inventory net of a minimal amount of assumed liabilities, and is subject to the final determination of the inventory amount and assumed liabilities amount at closing. The purchase price is payable in cash at closing and will be financed through additional financing to be obtained in connection with the transaction. The transaction is subject to the usual conditions and is expected to close towards the beginning of May 2015.
The Lion everyday cheese business includes cutting and wrapping, distribution, sales and marketing, and intellectual property associated with the COON, Cracker Barrel, Mil Lel and Fred Walker cheese brands. The business generates sales of approximately $160 million and employs approximately 170 people. The cut and wrap operations of the everyday cheese business are located in a building already owned by WCB, which is adjacent to WCB’s cheese manufacturing facility at Allansford.
The acquisition is subject to WCB shareholder approval under the ASX Listing Rules relating to related party transactions, as Lion holds 10.22 per cent of the shares in WCB. The Directors of WCB intend to recommend that shareholders vote in favour of the transaction.
Canada-based dairy company Saputo, which holds 87.92 per cent of the shares in WCB after it won a takeover battle for WCB in January 2014, is supportive of the transaction. Saputo has advised WCB that it will vote its shares in favour of the transaction. WCB said it expected to convene a shareholder meeting to be held in late April 2015 or early May 2015 to consider the transaction.
WCB said the acquisition would enable it to increase its presence in consumer branded everyday cheese products segment in Australia, with strong market positions in the segment.