SHARES in dairy processor Bega Cheese reached a new record price yesterday as the company prepares to release its half-year financial results.
Trading on the Australian Securities Exchange saw the share price eclipse Thursday’s record closing price of $5.07, hitting $5.16 immediately after the market opened.
During the day it hit $5.18 before settling to $5.15 at the close of trading, with 267,000 shares traded.
The share value has risen 25 cents in the past week and 80 cents since Bega pulled out of the race to take over Warrnambool Cheese and Butter (WCB) in December.
The company’s share value has risen by 83 per cent since August, before the takeover chase began.
Investors appear to be expecting a strong balance sheet in Wednesday’s results, with Bega having made about $65 profit before costs and taxes after accepting the offer from rival bidder Saputo for its WCB shares.
While the healthy financial position may be responsible for the strong investor interest, these is speculation that Bega may itself become the next target for takeover.
Bill Richmond, senior stockbroker with Bell Potter Securities, said the market appears to be driven by the expectation of strong results in next week’s half-yearly results.
“However, there is some speculation that Bega may become the target for some corporate action. But it remains nothing more than speculation at this stage,” Mr Richmond said.
Bega, as a company of roughly the same size as WCB, could well be seen as an alternative target.
However, Bega is a more problematic takeover target because its constitution limits individual shareholdings to 10 per cent, making it immune to hostile bids.
The share cap will lift to 15 per cent in three years but won’t be removed for 10 years, unless the board votes to do so.
WCB had a similar arrangement, but its cap was removed in 2011, leaving it wide open for takeover.
Speaking to The Standard from Singapore yesterday, Bega executive chairman Barry Irvin said he believed the strong support was recognition by investors that Bega is a very disciplined company.
“We have demonstrated that Bega is disciplined in its approach to business. I think investors recognise that and see it as a business with solid fundamentals in an industry with solid fundamentals,” Mr Irvin said.