Japanese-owned dairy, beer and wine group Kirin has thrust itself into an increasingly furious and costly three-way takeover battle for Warrnambool Cheese & Butter as it seeks to use a freshly acquired blocking stake to protect the viability of its cheese brands Coon and Cracker Barrel.
In a hectic, not to mention expensive, day on the sharemarket on Tuesday, Lion used its deep pockets to seize a 9.99 per cent strategic stake in Warrnambool Cheese & Butter, triggering a frenzied wave of buying that pushed shares in the Victorian dairy group up more than 10 per cent.
Hitting a high of $ 9.30, it assigned Warrnambool Cheese & Butter – which last financial year posted a profit of $ 7.5 million – a market capitalisation of just under $ 500 million, with three takeover suitors still circling the company and potentially poised to make further bids to push the final price tag even higher.
Lion on Tuesday night outed itself as the mystery buyer of a 9.99 per cent stake in Warrnambool Cheese & Butter, seeking to buy its shares reportedly at $ 9.25 each against Monday’s closing price of $ 8.36.
The sharemarket raid by Lion, whose owner Kirin paid $ 3.1 billion for National Foods in 2007 and
$ 910 million for Dairy Farmers in 2008, comes as Bega Cheese, Murray Goulburn Co-operative and Canada’s Saputo are locked in a bidding war for control of Warrnambool Cheese & Butter.
Shares in the cheese and milk group have more than doubled since Bega fired the opening shot in September, with Saputo recently throwing a bid of $ 8 per share on the table to knock out Bega and Murray Goulburn. The board of Warrnambool Cheese & Butter has unanimously recommended Saputo’s revised cash offer.
But with Lion now throwing its weight around, the takeover battle has become more complicated.
”Lion today confirmed that it has acquired a shareholding of 9.99 per cent in Warrnambool Cheese & Butter,” the company said in a statement. ”Lion has enjoyed a close relationship with WCB over many years and WCB plays an important role in Lion’s cheese business. Lion considers this stake a continuation and strengthening of this relationship.”
Lion, however, is unlikely to want to buy the company, especially not at these hefty prices. Rather, it has bought itself a crucial seat at the table, with Tuesday’s strategic move designed to safeguard Lion’s everyday cheese deal with the Victorian dairy group.
Warrnambool Cheese & Butter produces all of Lion’s flagship entry-level cheese brands, namely Cracker Barrel and Coon, at its Allansford plant, with a Lion factory next door cutting, wrapping and sending the cheese off to its supermarket and other retail customers.