The S&P/ASX 200 Index (ASX:XJO) fell on Thursday. Bega Cheese Ltd (ASX:BGA) announced some major acquisition news about Lion Dairy.
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The S&P/ASX 200 Index (ASX: XJO) fell by 0.7% today to 6,636 points.
Here are some of the highlights from the ASX:
Bega Cheese Ltd (ASX: BGA)
Bega Cheese announced today that it has entered into a binding share sale and purchase agreement to acquire all of Lion Dairy and Drinks for a net acquisition price of $534 million. The deal is expected to complete at the end of January 2021.
This acquisition will be funded by a combination of debt and the proceeds of a $401 million underwritten entitlement offer and placement.
There are a number of brands that it manufactures, markets, sells and distributes. There are milk-based beverage brands including Dare, Farmers Union, Big M, Masters and Dairy Farmers. It comes with the yoghurt brands of Yoplait, Farmers Union and Dairy Farmers. There are chilled juice brands like Juice Brothers and Daily Juice. It has cream and custard brands Pura and Dairy Farmers. Finally, it has white milk brands Pura, Dairy Farmers and Masters.
Lion Dairy and Drinks also has Australia’s largest national cold chain distribution network supplying food service and convenience stores. The company has a national manufacturing footprint comprising 13 sites.
The company also has joint ventures and alliances with Sodima and Vitasoy.
Bega Cheese and Lion Dairy and Drinks combined will generate revenue of more than $3 billion. Lion generated pro forma normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $56 million for the 12 months to September 2020.
Bega expects that it can find at least $41 million of synergies per year, mostly from the milk network optimisation, indirect procurement and a corporate reorganisation.
The company expects that the deal will be accretive for earnings per share (EPS) in the double digits.
Bega will have pro forma FY20 net debt of $518 million after the deal is done.
The executive Chair of Bega, Barry Irvin, said: “We are delighted to announce this acquisition which we believe will create significant value for shareholders. The acquisition delivers important industry consolidation and value creation with synergies across the entire supply chain. The expanded product range, manufacturing and distribution infrastructure and brand portfolio realises our ambition of creating a truly great Australian food company.”
The Bega Cheese share price didn’t move today as it’s in a trading halt whilst it carries out the capital raising at a price of $4.60, which is a 9.1% discount to the last closing price.
ASX tech shares rebound
Whilst the overall ASX 200 fell today, there was a resurgence of ASX tech shares that regained some of the lost ground.
The Xero Limited (ASX: XRO) share price rose by close to 4%. E-commerce business Kogan.com Ltd’s (ASX: KGN) share price went up by around 5%. The Redbubble Ltd (ASX: RBL) share price went up 1.5%. The Afterpay Ltd (ASX: APT) share price rose by around 1%.
WiseTech Global Ltd (ASX: WTC)
Global logistics software business WiseTech held its annual general meeting (AGM) for shareholders today.
At the meeting the company provided guidance for the FY21 result.
It said that since June, it has seen a recovery, with momentum improving and continuing in FY21. By the end of July, CargoWise user numbers were close to pre-COVID-19 levels and have seen been trending upwards and above historical averages.
WiseTech is guiding that its FY21 revenue will be up between 9% to 19%, to between $470 million to $510 million. It’s also expecting its EBITDA to grow between 22% to 42%, to a range of $155 million to $180 million.
Management said that COVID-19 has provided longer-term market disruption and has provided a tailwind for growing its market share as the need for digitalisation across the globe accelerates.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Xero. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.