The Scottish-based firm announced on Friday (January 13) that it was engaged in discussions with Müller following an increase in share price and today (January 16) confirmed that an offer had been accepted.
Julian Wild, food group director at law firm Rollits, told FoodManufacture.co.uk: “Muller have been finding life a bit hard in the UK, with management changes over the last year not helping.
“So it certainly doesn’t surprise me that it is looking at ways of growing its business.”
Competitive
Wild expressed surprise at the bid, however, due to the competitive nature of the UK liquid milk sector, describing the move as “a pretty ambitious plan”.
“I am surprised that anyone would be rushing to get into the UK liquid milk market as it is a very competitive and tough place to be,” he added.
“But Müller already knows the dairy sector very well. As it stands, the market is largely private label, so perhaps it feels it can attach a brand to the sector.”
Clive Black, analyst at Shore Capital, confirmed that Müller was now in a strong position to assume control of Robert Wiseman but stressed that deals such as this were “never done until they are done.”
The acquisition will require regulatory approval before going ahead.
The greatest potential benefit from acquiring the firm would come in milk procurement, collection and utilisation, according to Black.
He also added that the reasons behind the bid were not entirely clear and “a matter for its directors”. As a result of Wiseman’s excellence, the areas for operational improvement of the business were minimal, claimed Black.
Müller, which is already the market leader in the UK chilled dessert sector, has agreed to pay 390p per share for the firm. Both Wiseman and Shore Capital unanimously recommended that shareholders accept the offer.
Integrated
Robert Wiseman, chairman of Wiseman said: “The combination of Müller and Wiseman makes strong commercial and strategic sense, creating a leading integrated dairy business in the United Kingdom with complementary positions in the yogurt and potted desserts market and the fresh milk market.”
“Müller's offer represents an attractive price for an outstanding business and Müller recognises the importance of Wiseman's management (who will continue to lead the business alongside Müller), employees and our best-in-class assets. These factors have contributed to the Board's recommendation of this transaction.”
Wiseman confirmed that the firm’s management will stay in place after the deal and that shareholders, as of December 30 last year, will be entitled to an interim dividend of 5.75p.
Experts are now speculating that rival liquid milk giant Dairy Crest could be the next target for a takeover.
Black said: “The most direct read across from the interest in Wiseman is naturally for Dairy Crest Group. We do not make a direct read across to its competitor and so we cannot make a statement that Dairy Crest ‘will be next’,
“The interest in Wiseman will probably have a warm impact on the latter’s share price,” added Black.