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street talk Jul 14 2016 at 12:15 AM Updated Jul 14 2016 at 12:15 AM
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Greenhill in Bellamy's Australia camp as hedge funds reconsider positions
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Danone's $US10.6 billion bid for WhiteWave Foods has turned attention to Bellamy's Australia.
Danone's $US10.6 billion bid for WhiteWave Foods has turned attention to Bellamy's Australia. Kate Geraghty
by Sarah Thompson Anthony Macdonald Joyce Moullakis
Here's one to make the short-sellers think twice.
Street Talk can reveal Bellamy's Australia has independent investment bank Greenhill & Co in its camp, advising the board and management on all sorts of strategic matters.
And with organic food companies on high alert following French giant Danone's $US10.4 billion bid for WhiteWave Foods in the United States this time last week, you would have to think Greenhill's role would extend to defence should any tyrekickers wish to take things further. Bellamy's chairman Rob Woolley could not be reached for comment.
It comes at an interesting time for the organic food and infant formula producer.
The market darling, whose shares jumped from $1 to $15 in its first 18 months on the ASX boards and is now worth more than $1 billion, has divided the market.
While Bellamy's is easily the most successful initial public offering since the float window re-opened and a great Australian success story, it has also attracted a bunch of critics.
Hedge funds have voted with their feet and almost 10 per cent of Bellamy's shares on issue are held short, according to ASIC's most recent short positions report. The short-sellers hold concerns about the company's potential growth in China, sourcing of organic ingredients and rich trading multiple.
Although one of the biggest single risks to any short thesis is a takeover bid.
And with Danone paying 35-times forecast 2016 calendar year profit for WhiteWave, based on CLSA analysts' numbers, Bellamy's could be worth a whole lot more than $11.24 each, which is where they closed on Wednesday.
CLSA reckons that applying the WhiteWave multiple to Bellamy's 63¢ a share forecast earnings per share in the 2017 financial year, the company would be worth $22 a share.
That does not mean Bellamy's is about to get a bid. But it is certainly food for thought and the deal has both long investors and short sellers re-assessing their positions.
Elsewhere, the corporate regulator is understood to be taking steps toward setting up a national whistleblower compensation program.
Street Talk understands the Australian Securities and Investments Commission is assessing how a compensation scheme would work including funding and other requirements.
The issue of compensation for those that report governance and other corporate shortcomings was reignited after a number of high-profile scandals that hit the financial planning and life insurance industries in the past five years.
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