23 March 2000
Wiseman bid logic considered

THE logic behind the surprise bid by Robert Wiseman Dairies to acquire the liquid milk and cheese businesses of Unigate is considered in the Financial Times.

Industry rival Dairy Crest had already agreed to buy the business for 200 million in shares, which the newspaper says was a welcome move to consolidate an industry hit by pressure on margins and dismal share performance.

But then Scottish group Wiseman stepped in with a bid of 225m in cash.

The FTsays the attractions for Unigate shareholdersof the Wiseman approach are clear.

Under the Dairy Crest deal, the shares issued would pass directly to Unigate shareholders, allowing them to benefit from merger gains Dairy Crest expects to achieve.

But since the deal was announced, Dairy Crest shares have fallen, making them less attractive.

Wiseman by contrast is offering more and in cash which Unigate could either retain or pass to shareholders.

But the FThas more difficulty fathoming the attractions for Wiseman.

It claims buying Unigate would detract from Wisemans plan to win supermarket business for an English dairy it is building.

There is an assumption Wiseman would sell-off Unigates large commodity cheese business, claims the newspaper.

It notes that the deal would land Wiseman with a high level of debt, and questions the timing of the bid.

Wiseman is currently being investigated by the Competition Commission over allegations of anti-competitive behaviour in Scotland.

The FTsuggests Wiseman is simply being “canny and opportunistic”, believing Unigate will sell the business cheap, allowing it to gain national coverage at a stroke.