It’s a family affair as Wisemans back £280m Müller bid

THE £280 million swoop by German food giant Müller to buy Robert Wiseman Dairies – which would mark the latest in a long line of Scottish plcs to leave the stock market in recent years – looked a done deal last night.

Shares surged 18 per cent as the Wiseman family and the board gave irrevocable undertakings to accept the offer even if a rival approach comes in – a move played down by City analysts.

Alex White, a corporate finance partner at accountancy firm BDO, said: “That effectively blocks a competing bid and shows just how keen the board are to recommend the offer.”

He added that the deal looked “motivated by fear of the current difficult market and economic conditions”.

The announcement came alongside a trading statement for the fourth quarter of 2011 which highlighted the difficult nature of the milk market – a situation that is though to lie behind the family’s decision to sell to a larger player.

The recommended cash offer of 390p-a-share is at a 60 per cent premium to the closing share price on Thursday, the day before the talks were first announced. It also allows investors to benefit from an interim dividend of 5.75p a share. Shares in Wiseman jumped 59.5p to close last night at 387.5p.

“It’s a fair price,” said analyst Charles Pick of Numis Securities, pointing out the tough market conditions in which Wiseman operates.

Clive Black of Shore Capital described it as an “appetising” cash offer which he believed Wiseman’s wider shareholder base would welcome.

While Black said he was minded to recommend that investors accept the offer, he added it made sense to hold on in case there is a counter offer “which we have to say that we doubt”.

In addition to backing from the Wiseman family, which owns about 35 per cent of the company, Müller has support from Glasgow-based First Milk – the farmer-owned dairy business – which owns just over 10 per cent. It bought its stake in 2004 at 250p a share.

Institutional shareholders including Aviva Global Investors, F&C Fund Management and Majedie Asset Management are also backing the offer.

In total the German family firm has received undertakings and a letter of intent over a total of 54.9 per cent of Wiseman, which floated in 1994.

Müller has stressed that should the deal go through, the East Kilbride firm’s management will “continue to lead the business” alongside the German company. Executive chairman Robert Wiseman said it was “heartening” that the business will become part of another family-owned company.

“The combination of Müller and Wiseman makes strong commercial and strategic sense, creating a leading integrated dairy business in the UK with complementary positions in the yoghurt and potted desserts market and the fresh milk market.”

BDO’s White said there will be opportunities for Müller to generate significant central and some distribution costs savings from the deal.

“It has flagged that it intends to carry out an operational review, but has no views on what the outcome would be. As yet it has avoided making statements about job losses, but they do look likely,” he warned.