THE value of the Bega Cheese offer for Warrnambool Cheese and Butter (WCB) shares has risen above $6, thanks to a lift in its own share price.
At the time of the offer last Thursday, Bega shares were trading on the stock exchange for $3.15, but yesterday they were changing hands for $3.44, a lift of nine per cent.
The offer of 1.2 Bega shares plus $2 for each WCB share was valued at $5.78 based on the value on the day. At yesterday’s share price, the offer is now worth $6.13.
WCB shares also continued to climb, with 144,000 changing hands yesterday for between $5.86 and $5.95.
Bega, already an 18 per cent shareholder in WCB, announced a bid last Thursday to acquire the remaining shares through an off-market offer to shareholders.
The offer will open late next week and will remain open for at least a month.
Bega’s bid to merge the two companies is complicated by the 16.3 per cent held by rival processor Murray Goulburn.
Bega would need to obtain 90 per cent of WCB shares to precipitate delisting of WCB, forcing the remaining shareholders to sell. The threshold could not be reached without some of Murray Goulburn’s holding.
Bega’s bid is the latest part of a growth phase that would give the company processing facilities covering all Victoria’s dairying regions.
Executive chairman Barry Irvin said the merger would produce savings of $7.5 million annually.