Warrnambool Turns Down Takeover Bid

Submitted by Jim Thesiger on 29 December, 2009 - 05:45

Warrnambool Cheese & Butter (WCB), an internationally known dairy company that is engaged in the production and distribution of dairy products including packaged milk, cream, butter, cheese, milk powder and whey protein concentrate has rejected two takeover bids both of which worth around $156 million. The shares of the dairy company was boosted by 23 percent during the Christmas Eve after it revealed the full extend of the unsolicited takeover bids that were submitted to takeover the only listed dairy company of Australia. It is to be mentioned that WCB has forecasted a return to profitability that ranges in between $6 million and $8 million for the six months ended in 31st of December where it posted a $20 million worth of loss in the previous year.

Frank Davis, the chairman of Warrnambool informed that the first takeover bid was submitted on October 20 and the same bidder came up with a higher offer on 17th of December. The second takeover bid from another bidder was submitted on 8th of December. Although the identity of those bidders was not revealed but Champ Private Equity and Murray Goulburn along with some other competitors of WCB are in the list of the speculators. He termed the approximately $4 per share offer as opportunistic and claimed that the figure was not the true reflection of the medium term and long term prospects of the company and its future position in this industry.

The Warrnambool chairman has advised that the investors (shareholders) take no action in response to the bids. It is to be mentioned that a bid is likely to require the support of the entire board of the company as the constitution of Warrnambool includes an anti-takeover clause. The stock of the company went up by 54 percent after the news regarding the bids were revealed.