The East Kilbride-based company, which employs some 1,000 people across Scotland, said it was in talks with Müller’s UK arm about a possible cash offer for the business which provides about a third of the fresh milk consumed in the UK every day.
Shares in the company, which has struggled in recent times amid tough trading conditions and fierce supermarket price wars, jumped by more than a third in response to the statement which was issued yesterday afternoon after shares had already started to climb.
While the firm stressed that there can be no certainty that any offer will be made for the business, analyst Charles Hall of Peel Hunt said City reaction to the announcement suggested a deal was “highly likely”. “I think if the Wiseman brothers have mentally decided to sell, then they will be keen to try and make sure a deal goes through,” he said, adding that he also thought it unlikely that another potential bidder would emerge.
About 35 per cent of the company is owned by the Wiseman family meaning a potential windfall of more than £80 million if a deal was done at around yesterday’s closing price of 328p, valuing the company at £233m.
Many of the company’s 5,000 UK employees also own shares through investments in staff share schemes.
Wiseman, which supplies customers including Tesco, has had a tough last two years and in November reported a 42 per cent fall in half year pre-tax profits to £11.8m against a backdrop of higher prices being paid to farmers and intense retail competition.
Analysts said that, given the difficult conditions in the sector, they could understand why the Wisemans would be tempted to sell but noted that the rationale behind Müller’s interest in the company was less clear.
“Müller is not a massive buyer of milk in this country so there is a little bit of head scratching as to why they want to be vertically integrated in this way,” said Charles Pick of Numis Securities. Peel Hunt’s Hall also said synergies between the two businesses would be “very limited” but added that there could be efficiencies in head office costs.
“The rationale looks to me that they think it is a cheap asset, they know the industry and they have the ability to do a deal,” added Hall, who suggested a price of around 350/360p-a-share may be enough to secure support from the Wiseman family.
The company was founded in East Kilbride by Robert Wiseman senior in 1947. His son Alan joined the firm straight from school in 1967 before taking control on his father’s retirement in 1976.
Alan Wiseman took the company public in 1994 before announcing in 2010 that he was to retire as chairman in a move which saw his younger brother Robert step up to the role from chief executive. In recent years the family has been gradually reducing its stake in the company.
Privately-owned Theo Müller was formed in Bavaria in 1896 and is best known for its Müller brand of yoghurts and creamed rice. It has a turnover of around £1.8 billion. Under UK takeover rules, the German company has until 10 February to make a firm offer.
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