...final bids for the Kirin-owned Lion Dairy and Drinks business are due to the company and its advisers at DeutscheBank on Wednesday.
And it is understood the sale is shaping as a three-horse race between two potential strategic acquirers–Canadian dairy company Saputo and ASX-listed Bega Cheese– and John Wylie’s alternative asset manager Tanarra Capital.
Saputo’s buying intentions are serious enough for it to have alerted the competition regulator of its indicative proposal a fortnight ago.The ACCC launched a market inquiry. It is understood Bega also went to Rod Sims’ shop but any competition concerns weren’t serious enough to warrant a full-blown investigation.
Meanwhile,Tanarra’s private equity arm has already put its money where its mouth is when it comes to the dairy products game.It dipped its toe into the dairy industry last month,when it agreed a $50million deal to buy a significant stake in organic dairy products producer Barambah Organics.
The big question for Lion owner Kirin is whether it can achieve a price close to the $600 million that China Mengniu Dairy was willing to pay for the business, before that sale was blocked by Treasurer Josh Frydenberg on national interest grounds.It is understood the company had told potential buyers that its earnings were forecast to grow 8 per cent and it was forecasting $1.55 billion net service revenue this year, compared to $1.54 billion in 2019.
Buyers were also told the business had Australia’s only national cold chain distribution network to deliver its products, including milk-based drinks, yoghurts and juices.
It’s been a long process for Kirin, which has effectively been running this sale for the better part of two years.
Kirin launched a strategic review into the Australian dairy business in September 2018, kicked off an auction and then shelved it when it sold its speciality cheese business instead.
It then re-launched the auction and reached a deal with China Mengniu before that was scuttled at the last minute by the Treasurer.So this is a round three of sorts and, if the price is right, we’re sure Kirin wants to get something signed quickly and moo-ve on. (Sorry.)
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Ash here.
BGA would need a cap raise to buy this attractive bolt-on. The big question is price. We shall see.
Ash
BGA Price at posting:
$5.15 Sentiment: None Disclosure: Held
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