18 Jan 2012 UK: Germany’s Müller buys Wiseman Dairies for £279.5m
The founding family of Britain’s biggest milk producer stands to pocket nearly £100m after agreeing to sell the firm to the German dairy company, Müller.
Robert Wiseman Dairies, which started out as a family farm in East Kilbride in 1947 (and still operates from the original farmhouse), has agreed to be taken over for £279.5m by its Bavarian rival, best known for its range of yoghurts, including the Müller Corner. Wiseman shares jumped 60p, or 18%, to 388p on the news.
The founding Wiseman family own 35% of the shares, while just over 1 000 of its 5 000 employees also own shares in the business. The lion’s share of the windfall will go to Robert Wiseman, the 56-year-old executive chairman, who will pocket £49m, and his brother Alan, aged 60, who retired as chairman last year and stands to reap £35m from the deal. The youngest brother, Gavin, 50, the administrative and purchasing director, will get £8m. Meanwhile, the dairy farmer co-operative First Milk, which owns 10% of Wiseman, will receive £27.9m.
Robert Wiseman will be replaced as chairman by Müller’s chief executive, Heiner Kamps, but will stay on as a director, and the rest of the management is also staying on.
Kamps said: “This is an exciting strategic move by Müller to enter a new market segment in the UK. The combination of these complementary businesses will form a leading dairy player. This will create significant opportunities, which will benefit suppliers, customers, consumers and employees.”
Müller has given reassurances that it will not make any changes to the Scottish company’s locations or conditions of employment. Michael McCann, Labour MP for East Kilbride, Strathaven and Lesmahagow, called for firm guarantees that the takeover would not lead to job losses. He said: “I am seeking to meet the company, union and workforce in the coming days to help in any way I can.”
Wiseman’s communications director, Graeme Jack, said job losses could not be ruled out. “Upon taking control, [Müller] will want to review the business and may identify certain operational changes. They already have a yoghurt business in Market Drayton [in Shropshire].”
Wiseman, which floated on the London stock market in 1994, provides a third of Britain’s fresh milk from six dairies and 14 depots around the country – processing 1.5bn litres a year. Its customers include Tesco, Sainsbury’s and the Co-operative Group, as well as 12,000 convenience stores – it is the biggest supplier of milk to corner shops.
The recommended cash offer of 390p a share is at a 60% premium to Robert Wiseman’s closing share price last Thursday, the day before takeover talks were announced. The shares had already climbed 20% on rumours that Wiseman was the target of a takeover bid. The group appointed Greenhill in November 2010 to consider options for the company, including partnerships, joint ventures or a sale. Greenhill approached Müller last summer, and the German group came back with an offer in November.
Analysts said the acquisition looked like a “done deal”, although the brokers Peel Hunt noted that Müller also holds 3% of Dairy Crest and was rumoured to be a potential suitor a couple of years ago. “A successful bid for Wiseman would make it less likely that Müller would buy Dairy Crest; however, it could turn its attention to Dairy Crest [if a deal falls through].
“The rationale for Wiseman to sell looks clear, given the age of the Wiseman brothers and the outlook for the dairy industry. It is difficult to see a clear rationale for Müller. There will be a small amount of savings in combining it with its UK yoghurt business, but there is no real strategic benefit,” the Peel Hunt analysts said.
Clive Black, at Shore Capital, described the cash offer as “appetising” and Wiseman as a “class act”. He added: “Quite what Müller sees in Wiseman is a matter for its directors, albeit we foresee the greatest potential benefits from the business combination to emerge in milk procurement, collection and utilisation (those milk procurement savings could be very substantial, by the way).”
Source: The Guardian