BEGA Cheese has been given the all-clear by the competition watchdog to go ahead with its Warrnambool Cheese and Butter (WCB) takeover bid.
Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said there was little overlap between Bega and WCB in the acquisition of raw milk in the south-west region.
In a posting to the Australian Securities Exchange yesterday, Mr Sims said the ACCC concluded that a merged Bega and WCB would continue to be constrained by competitors in the region, particularly Murray Goulburn and Fonterra, resulting in continued competition.
Mr Sims said the ACCC consulted widely with farmers, rival dairy manufacturers and consumers of bulk and packaged products in reaching its conclusion.
Bega executive chairman Barry Irvin said he was pleased to receive clearance, although he was always confident of the outcome.
“I would have been surprised if it had gone against us,” Mr Irvin said.
“All the external factors are now out of way — everything else is for us to deal with internally.”
He said he would attempt to get board members together late next week to consider the company’s next move.
Bega is offering 1.2 of its own shares plus $2 for each WCB share, a bid that is worth $7.27 at the current Bega share price.
This is about a dollar below the level being paid for WCB shares on the stock exchange.
“The board will consider some of the conditions attached to our bid and will consider a revised offer,” Mr Irvin said.
“We are being very deliberate about this. Just look at what has happened during the last month — if we had reacted to every event since we made our offer we would have made a lot of pointless decisions. Our next move will be very well considered.”
The ACCC decision makes Bega the first of the bidders to get clearance for its takeover bid. Murray Goulburn’s proposal has yet to be considered by the Australian Competition Tribunal and Saputo has not yet been cleared by the Foreign Investment Review Board.