Bega knocks back Hong Kong giant’s $27.5 million offer for Vitasoy

Bega Group says a $27.5 million offer for its stake in plant-based beverages business Vitasoy Australia is too low, demanding an independent valuation of the company it jointly owns with Hong Kong’s Vita International.

The Australian dairy company was blindsided in mid-October when it found out from an announcement on the Hong Kong stock exchange that Vita intends to buy Bega’s 49 per cent stake in the business, with a pre-approval from the Australian Foreign Investment Review Board. Vita International is legally entitled to exercise its right to acquire Bega’s half of the business.

Vitasoy is popular in Asia as many people find they struggle with lactose intolerance.Credit: Bloomberg

Vitasoy Australia makes a range of plant-based milk, beverages and yoghurt products sold in Australia and New Zealand as well as overseas.

Vitasoy International, the Hong Kong stock exchange-listed parent company of Vita International, said in its announcement it believed $27.5 million would constitute fair value for Bega’s stake, according to a “recent valuation report by an independent party”.

Bega could either accept this figure or dispute the amount, which it intends to do, which would see the value determined by an independent expert.

“Bega Cheese believes that $27.5 million is substantially less than the fair value of [Bega’s] shareholding in Vitasoy Australia and, accordingly, [Bega] intends to dispute the fair value amount proposed by Vita International,” the dairy company said in a statement to the ASX on Thursday.

Vitasoy products.Credit: Brendan Esposito

Investors in the company did not look favourably upon the update, with its share price ending Thursday’s session down 2.4 per cent to $3.29.

Bega Group’s subsidiary National Foods paid $8.6 million for its 49 per cent stake in December 1999 when Vitasoy Australia was incorporated, Vita International’s document states. The business made $4.2 million after tax in profit in the 2021 financial year and $3.7 million in the 2022 financial year.

Vita International, a $24 billion company, is seeking to fully own Vitasoy Australia given the rising popularity of plant-based milks.

“The board believes that by exercising the call option to acquire the remaining 49 per cent of the issued shares in Vitasoy Australia that is held by National Foods, Vitasoy Australia will become an indirect wholly owned subsidiary of the company and will be better aligned with the strategic direction of the group in providing nutritious plant-based milk products and capturing synergies and opportunities,” it said.

Bega has signalled it will seek other opportunities in the plant-based beverages market if Vita International acquires its stake.

“Bega Cheese recognises the growing market importance of plant-based beverages and products and will assess its options to continue involvement in this sector if its interest in Vitasoy Australia is acquired by Vita International,” the dairy company stated on 17 October.

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