Deals

Bega Cheese to sell Capilano stake and clear way for take-private bid

The dairy producer has bowed out of contention in the race to buy Capilano, with a China-focused consortium poised to triumph.

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ASX-listed Bega Cheese has stated its intention to vote in favour of a take-private bid for Capilano Honey, ending speculation that it might submit a rival offer itself.

The dairy producer said in a statement that it would accept the offer of A$21.00 ($15.21; €13.41) per share tabled by Bravo HoldCo, a consortium consisting of Wattle Hill RHC Fund and Roc Capital.

The offer is now expected to be approved by a majority of Capilano’s shareholders and will result in Bravo HoldCo acquiring 100 percent of the company’s shares, including Bega Cheese’s 15.6 percent holding.

Bega began to build its stake following the announcement of Bravo HoldCo’s initial offer of A$20.06 per share in August, which it increased to A$21.00 last week.

That prompted speculation among market observers that it was considering a tilt of its own for Capilano Honey fuelled by a A$202 million raising through a share-purchase plan, partly to improve the company’s flexibility “to take advantage of future growth opportunities in dairy and food.”

Shareholders in Capilano Honey will be able to accept the cash consideration, or take a 1:1 swap for shares in the new private entity.

At the time of its original bid in August, Bravo HoldCo made clear its intention to target Asian markets, particularly China, with Capilano, as the honey producer has been trying to increase its exports of premium Australian honey.

Despite Chinese direct investment into Australian agriculture slowing in recent years, many investors see opportunities in selling premium Australian products into the Chinese and other Southeast-Asian markets.

Wattle Hill, one of the consortium partners, focuses on investments in Australian businesses that supply products and services in demand by Chinese consumers. Co-founder Albert Tse is the son-in-law of former Australian prime minister Kevin Rudd.

Roc Partners was established in June 2014 following the management buy-out of Macquarie Group’s private markets business unit by its senior executives. It owns a majority stake in Wagyu beef producer Stone Axe Pastoral Company and has invested in New South Wales oyster producer Oyster Coast.