Bellamy’s contentious takeover offer is moving small cap infant formula players
Food & Agriculture
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Infant formula stock Wattle Health (ASX:WHA) has told the ASX that Bellamy’s (ASX:BAL) is to blame for its wildly fluctuating share price — and several fellow small cap infant formula players have been affected too.
Early last week, mid cap infant formula business Bellamy’s revealed it had entered a scheme of arrangement with China Mengniu Dairy Company, by which Mengniu would acquire Bellamy’s in full.
Bellamy’s shares closed on Friday September 13 at $8.32; by close of business on Monday September 16, they had jumped 55 per cent to $12.89.
Wattle and fellow infant formula players Clover Corp (ASX:CLV), Keytone Dairy (ASX:KTD) and Bubs Australia (ASX:BUB) have seen increases in their share price since Bellamy’s news.
The ASX noticed that on Monday, Wattle Health’s share price jumped 30 per cent. The company replied after the market closed saying Bellamy’s news was the reason for the run in its shares.
“We note Bellamy’s announcement; this news has generated a considerable market interest for WHA and has created a positive impact in the sector overall,” the company said.
Its shares have gained 78 per cent since the Bellamy’s news, and Clover (up 29pc), Keytone (up 23pc) and Bubs (up 12pc) have all similarly benefited.
Mengniu is offering Bellamy’s shareholders $12.65 for every share they own, and Bellamy’s is attempting to sweeten the deal by offering a 60c-per-share dividend on top of that, taking shareholder value to $13.25 a share.
The offer values Bellamy’s at $1.5 billion, and the company’s board is unanimously recommending the deal go ahead. However, it needs not only shareholder approval, but also NSW Supreme Court and Foreign Investment Review Board (FIRB) approval.
Wattle Health shareholders didn’t appear too impressed with the company’s response — shares have plummeted 21 per cent today to a low of 56c.
Bellamy’s will send a scheme booklet to ASIC on October 14, face the court on October 29, send the booklet to shareholders on November 1 and hold a vote on December 4, provided it receives all the necessary approvals to get to that point.
Here is a table of ASX dairy-related stocks and their share price movement:
|Code||Name||Price Sept 24||% return since Bellamy's news||1-yr return|
|WHA||WATTLE HEALTH AUSTRALIA LTD||0.62||78||-30|
|CLV||CLOVER CORP LTD||2.78||29||78|
|KTD||KEYTONE DAIRY CORP LTD||0.5||23||-9|
|BUB||BUBS AUSTRALIA LTD||1.305||12||109|
|AHF||AUSTRALIAN DAIRY NUTRITIONAL||0.14||4||-7|
|SM1||SYNLAIT MILK LTD||8.82||0||-15|
|HRL||HRL HOLDINGS LTD||0.11||0||-35|
|LON||LONGTABLE GROUP LTD||0.175||0||-62|
|BAL||BELLAMY'S AUSTRALIA LTD||12.885||-1||36|
|A2M||A2 MILK CO LTD||12.35||-4||16|
|BFC||BESTON GLOBAL FOOD CO LTD||0.115||-4||-34|
|AU8||AUMAKE INTERNATIONAL LTD||0.145||-6||-51|