Bega to get bigger with purchase of Lion’s dairy business

ASX-listed Bega Cheese looks primed to add yoghurt to its portfolio of products after beating out international dairy giant Saputo and Tanarra Capital to the Lion Dairy and Drinks business.

The $550 million deal, now in the final stages of negotiations, would be mostly funded by a capital raising of about $400 million, with the balance to be funded by debt. Bega went into a trading halt on Monday pending an announcement about the proposed acquisition and an expected capital raising.

Bega, Saputo and Tanarra were all in pursuit of Lion’s dairy and drinks division until Saputo pulled out of the process last Friday. Saputo’s withdrawal opened the door for Bega to enter Lion’s data room over the weekend, giving it access to highly detailed financial information about the business, including significant contracts it has signed.

A successful acquisition will see the $1.1 billion company bring a number of major labels -Pura Milk, Dairy Farmers, Yoplait yoghurt, Farmers Union and Daily Juice – into its fold. Bega would also take charge of an extensive national cold chain distribution network with a vast number of fridges in service stations and convenience stores under the deal, and about a dozen manufacturing sites across Australia.

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