Fonterra joins battle in Aussie dairy consolidation, builds stake in Bega
Fonterra Cooperative Group [NZX: FCG], the world's biggest dairy exporter, has built a 6 percent stake in ASX-listed Bega Cheese [ASX: BGA], signalling its support for a complex battle for control of third tier players in the Australian dairy industry as it rationalises.
Fonterra already licenses the Bega brand and has a cheese supply contract with the Australian company. It has bought 9.3 million shares at A$4.95 apiece for a total of A$46 million, it said in a statement. That's a 12 percent premium to Bega's closing share price on the ASX yesterday.
Australian media has reported Fonterra is looking to build a 10 percent stake in Bega, hiring Goldman Sachs to broker the deal.
The acquisition comes as Bega is embroiled in a takeover battle for Warrnambool Cheese & Butter.
Bega owns about 18 percent of WCB, having offered A$7.29 in cash and scrip for the Victorian dairy producer. Fellow WCB shareholder Murray Goulburn Cooperative has offered A$7.50 a share, and both have been trumped by Canada's Saputo bid of A$8, which has won backing from WCB's board.
Japan's Kirin is complicating the takeover tussle further, buying a 10 percent stake through its Lion subsidiary earlier this week.
"There has recently been a lot of consolidation in the Australia dairy industry," Fonterra chief executive Theo Spierings said. "It is important that Fonterra participates and we have confidence in Bega and the strategy it is pursuing."
Units in the Fonterra Shareholders' Fund, which gives investors exposure to the dairy company's earnings stream, were unchanged at $6.91 on the NZX yesterday, and have slipped 1.8 percent this year.