7 June 1996

Wiseman courting Scottish Pride with take-over in mind

By Philip Clarke

TAKE-OVER rumours eclipsed this weeks announcement of record profits by Robert Wiseman Dairies in Scotland, as the company confirmed it had made a preliminary approach to Scottish Pride.

A combined business would control about 80% of the Scottish milk market and would undoubtedly attract the attentions of the competition authorities.

While it could argue that the company is operating in a pan-European market, not a Scottish one, observers were quick to point out that that argument had failed when the old Scottish MMB had tried to retain posession of Scottish Pride, its former processing arm.

But managing director of Scottish Milk (the SMMBs successor body) Jack Pirie, said the two situations were not strictly comparable. Wiseman and Scottish Pride were both processors, whereas the old SMMB also controlled the raw material. He did not see any potential problems with the Monopolies and Mergers Commission and welcomed the idea of a Wiseman/Scottish Pride get-together, if it made for a more efficient and competitive Scottish dairy sector.

News of the possible takeover came in a short statement to the Stock Exchange on Monday (Jun 3) in which Scottish Pride said it had received an approach "which may or may not lead to an offer".

According to food analyst with Barclays de Zoette Wedd, Julian Hardwick, there must have been a massive leak of the Wiseman move, as the Scottish Pride share value had almost doubled in the space of a week. As such, the Stock Exchange required Scottish Pride to make a statement, the result of which was to send the share price up another 13p to 61p.

Just six weeks ago, Scottish Pride had issued a warning of a £4.2m loss in the year to Mar 30, pushing the share values down to 30p.

&#8226 In the year to Mar 30, Robert Wiseman Dairies managed a 44% rise in pre-tax profits to £10m on sales up 37% at £148m. This profit was reduced by £1.5m to account for restructuring charges associated with the acquisitions of the CWS liquid business and Hamiltons Dairies.

Following an agressive pricing campaign, the company now procures 33% of its milk supplies direct from farmers. But Mr Wiseman warned of falling prices later in the year as the effects of the BSE crisis on dairy exports and the weak state of dairy product markets take effect.