By a staff reporter, with AAP
Bega Cheese Ltd has launched a full takeover bid for Warrnambool Cheese and Butter Factory Company Holdings Ltd, which would create one of Australia's largest listed food companies.
Investors were pleased, with WCB shares surging $1.25, or 27.72 per cent, to $5.76 at 1114 AEST.
Bega executive chairman Barry Irvin said the merger would include Tatura Milk and create a business operating at more than seven sites, producing 353,000 tonnes of dairy products, generating revenue of $1.5 billion.
"Customers, dairy farmer suppliers and employees will also benefit from being associated with a larger, more diversified organisation, an enhanced market position and a scale that is globally relevant," he said.
In a statement to the Australian Securities Exchange, Bega said it would offer 1.2 of its shares and $2.00 cash for each remaining WCB share it doesn't already own.
"WCB shareholders are being offered shares in Bega which has a record of strong financial performance and value creation," Mr Irvin said.
"While the potential synergies are substantial, we intend to deliver them while preserving WCB's identity and brands."
The dairy producer is offering a 28 per cent premium on WCB's last closing price of $4.51.
Bega, which currently owns 18 per cent of WCB, has set a deadline of 1900 AEST for the offer.
But in its own statement to the Australian Securities Exchange, WCB urged shareholders not to take any action until its directors had reviewed the bid, which would happen "shortly".
"WCB's directors are not yet in a position to make a formal recommendation to shareholders," the company said.
"Until WCB's directors have issued their formal recommendation regarding the offer, shareholders are advised to take no action in relation to Bega's offer."
The takeover target has appointed Minter Ellison and CIMB Corporate Finance (Australia) Ltd to assist with reviewing the proposal.