Warrnambool Cheese and Butter suitors down to two as Bega slips out of race

BEGA Cheese is bowing out of the battle to take over Warrnambool Cheese and Butter (WCB).

Its offer to shareholders of 1.5 Bega shares plus $2 cash for each WCB share has failed to gain traction against the all-cash bids from Saputo and Murray Goulburn.

Bega executive chairman Barry Irvin announced to the Australian Securities Exchange yesterday that its offer, which closes at 7pm tomorrow, would not be extended.

The company, which kicked off the takeover chase in September,  already holding 18 per cent of the WCB register, had added only about one  per cent throughout the bidding process.

Mr Irvin said the company would consider what to do with its holding after the offer closed. 

While defeated in its original aim, Bega stands to profit handsomely thanks to the bidding war it started.

Bega first became a WCB shareholder less than three years ago when it was invited by WCB to take a 15 per cent holding through a special share issue, in return for much-needed cash.

Bega paid just $2.95 per share for the initial holding and later added a further three per cent through on-market purchases.

Its holding has cost Bega about $35 million. It is now worth about $100 million if sold to Saputo or Murray Goulburn, so Bega could walk away with about $65 million profit.

Murray Goulburn yesterday responded to Saputo’s final and revised offer, urging shareholders not to rush their decision to sell.

The co-operative is waiting for its application to the Australian Competition Tribunal to be heard. A result is expected in late February, by which time Saputo’s offer will be closed, unless further extended.

Managing director Gary Helou said he expected Murray Goulburn’s bidder’s statement and acceptance form to be sent to WCB shareholders next Monday.

Mr Helou told shareholders that Saputo may not reach the ownership levels required to trigger the higher levels of payment that would rival its offer.

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