On Friday 20 November 2020 in the afternoon, online at 'The Australian', financial commentator John Durie suggests that Saputo (Canadian owner of Warrnambool Cheese and Butter, Coon cheese brand that is controversially being renamed, Mersey Valley cheese from Tasmania et al) has dropped out of the race for Lion Dairy and Drinks.
Durie suggests BGA may use debt for such an acquisition and claims that LD & D may be bought for $550 million.
Whether BGA uses debt or has another equity raising is the $64 million question should it undertake this large transaction. Durie says debt is at 2.3 times earnings but wants to get the ratio of debt to equity down to under twice earnings.
He says BGA hasn't achieved targeted earnings yet from the 2017 $460 million acquisition of Mondelez brands such as famous Vegemite, and the former Kraft peanut butter.
But I had a delicious Bega peanut butter - that 'Simply Nuts brand - sandwich at lunchtime today and there's BGA cheese in my fridge despite only purchasing its shares in the past week. Many Australians are realising that not many major dairy companies are locally owned: Norco is one other I can think of.
To be continued...
BGA Price at posting:
$5.06 Sentiment: Hold Disclosure: Held
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