BEGA Cheese shares hit a record high yesterday as Fonterra pursues a reported ambition to buy a 10 per cent holding in the company.
Fonterra bought a six per cent stake in Bega on Thursday through an off-market crossing of 9.3 million shares at $4.95, costing the company $46 million.
It is said to be after a blocking level of 10 per cent that would protect Bega from full takeover and secure its cheese contracts with the company.
Bega’s shares traded above $5 for the first time yesterday morning, reached a high of $5.15 and closed the day at $5.10 on a traded volume of 2.38 million shares.
While no company has made a move on Bega, which is one of three bidders tussling to buy Warrnambool Cheese and Butter (WCB), it could well become a target given the developments of the past few weeks.
Bega is offering WCB shareholders 1.2 Bega shares plus $2 for each of its shares. At yesterday’s closing price this offer was worth $8.12.
The Bega board will meet this week to consider lifting the value of its offer for WCB.
Executive chairman Barry Irvin said last week the company was focused on achieving its takeover of WCB and pursuing a deliberate process to achieve that goal.
Canadian company Saputo’s offer of $8 cash for WCB has been recommended to shareholders by the WCB board, but the dairy processor’s chances of obtaining its minimum target of a 50.1 per cent holding have become slim, with 45 per cent of WCB now held jointly by Bega, Murray Goulburn and Japanese giant Lion.