Bega Cheese (ASX:BGA) enters trading halt, proposed acquisition announcement pending

  • November 23, 2020 03:16 PM AEDT
  • Hina Chowdhary
    Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1706 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

Bega Cheese (ASX:BGA) enters trading halt, proposed acquisition announcement pending

Summary

  • The shares of Bega Cheese Limited have been placed in a Trading Halt at BGA’s request starting 23 November 2020.
  • BGA shares shall remain in trading halt till 27 November 2020 or when the announcement related to capital raising and a proposed acquisition is released.
  • Bega Cheese’s potential capital raising shall comprise of an accelerated pro-rata offer, and the Company shall notify the market once the details have been finalised.

The shares of Bega Cheese Limited (ASX:BGA) have been placed in a trading halt on 23 November 2020 as the Company plans to release a material announcement to the market. The BGA shares last traded at A$5.060 with a market capitalisation of A$1.08 billion.

Speculations say that the proposed capital raising indicates that it is highly likely that BGA’s bid for the Lion Dairy & Drinks business shall turn out to be a successful one. Moreover, BGA’s announcement regarding trading halt read “announcement about a proposed acquisition and a proposed capital raising”. Since the proposed acquisition remains incomplete and is subject to final negotiations, BGA shall notify further progress once the details have been finalised.

The Company further added that the capital raising would comprise of an accelerated pro-rata offer.

Bega Cheese likely to acquire Kirin Holdings’ Lion Dairy & Drinks Business

According to media reports, Bega has been in the race to finalise a deal with Japan-based Kirin Holdings to purchase its Lion Dairy & Drinks business. The deal is expected to be worth over A$500 million.

For the deal to go through, BGA would be looking to raise capital for funding the acquisition of the Lion business that is expected to be worth hundreds of millions of dollars. The deal would require BGA to up its cash position.

Lion Pty Limited is a food and beverage player with operations in both Australia and New Zealand. The Company’s Dairy & Drinks division is engaged in the production, marketing, and distribution of milk products, yoghurt, dairy beverages, soy, and juice. The Company’s key brands include Dare, Dairy Farmers, Vitasoy, and Big M.

The Australian Company, wholly owned by Kirin Holdings, has been keen to offload the Dairy & Drink business as it wants to focus on the Beer business. According to reports, the division has been on the market since the last two years and was almost sold to a Hong Kong-based dairy company. However, Australia’s Foreign Investment Review Board did not approve the deal, and the two parties decided to back out from the discussion.

BGA securities are expected to remain in trading halt till the announcement is released to the market or the commencement of normal trading on 27 November 2020, whichever is earlier.

 

 


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