Bega in talks with "non-Australian" investors on Warrnambool stake: source

SYDNEY Thu Dec 26, 2013 9:58pm EST

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SYDNEY (Reuters) - Bega Cheese Ltd is in talks with "non-Australian" investors on a possible sale of its stake in Australia's oldest dairy firm, a source familiar with the situation said, adding a new twist to one of the country's most contested takeover battles in years.

Warrnambool Cheese and Butter Factory Co Holdings Co (WCB.AX) has been the takeover target for Bega (BGA.AX), fellow Australian cheese maker Murray Goulburn Co-operative Co Ltd and Canadian dairy giant Saputo Inc (SAP.TO), as investors bet on rising Asian demand for Australian dairy products.

Bega, the biggest shareholder in Warrnambool, kicked off the takeover war in mid-September but decided last week not to extend its final offer after being out-bid by its rivals. It is currently considering what to do with its 18.7 percent stake, the source told Reuters on Friday.

People think Bega will sell either to Murray Goulburn or to Saputo, but it has been approached by other companies including non-Australian firms since closing its bid, said the source, who was not authorised to speak publicly on the matter.

China's sovereign wealth fund CIC CIC.UL is backing a Chinese food company that is considering bidding for Warrnambool, the Business Spectator website reported on Friday, without citing any sources or identifying the company.

Bega could be enticed to sell to a Chinese bidder that offered A$10 a share, Business Spectator said.

A call to CIC seeking comments was not returned, while officials at Warrnambool and Bega were not immediately available for comment.

Warrnambool is backing a bid from Saputo worth as much as A$9.60 per share, or A$549 million ($488 million), if it receives acceptances of 90 percent or more of its shareholders.

Murray Goulburn has offered A$9.50 per share in a bid subject to a ruling from the Australian Competition Tribunal.

Bega wouldn't want to be entertaining a third party unless the price was above A$9.50, the source said.

Earlier this month, Warrnambool said it will double its first-half earnings thanks to strong international dairy demand and pricing, a falling Australian dollar and an improved product mix.

(Additional reporting by Colin Packham; Editing by Bob Burgdorfer and Ryan Woo)

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