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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Arla Foods | ARU | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 70.75 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 70.75 | 70.75 |
| Top Posts |
|---|
Posted at 22/1/2007 14:58 by damofarl 71 p it is and no dividend! The boards of Arla Holding and Arla Foods UK announce the terms of the recommended acquisition by Arla Holding of the 49 per cent. of Arla Foods UK it does not currently own at a price of 71 pence per share in cash (the "Acquisition"). The Acquisition price values the entire existing issued share capital of Arla Foods UK at £434.5 million and the shares not owned by Arla Holding at £212.9 million. The Acquisition price represents a premium of 22.4 per cent. to the Arla Foods UK share price before discussions were announced on 20 October 2006 and a premium of 43.5 per cent. to the average share price over the 3 months prior to the announcement concerning discussions. Under the terms of the Acquisition, Arla Foods UK Shareholders will not be entitled to Arla Foods UK's proposed final dividend of 0.8 pence per Arla Foods UK Share in respect of the financial year ended 30 September 2006. The Board of Arla Foods UK has undertaken to seek the approval of the Arla Foods UK Shareholders at the Arla Foods UK Annual General Meeting to be held on 27 February 2007 to adjourn the resolution to approve the payment of such proposed final dividend. No further dividend will be paid or declared and the Board of Arla Foods UK will not reconvene a meeting to consider the adjourned dividend resolution unless the Scheme does not become effective in accordance with its terms. The Loan Notes, which will be governed by English law, will bear interest (from and including the date of issue of the Loan Notes), payable every six months in arrears on 31 March and 30 September in each year at a rate of 0.75 per cent. below LIBOR, such rate to be determined on the first business day of each interest period. The first interest payment date will be 30 September 2007 in respect of the period from the date of issue of the Loan Notes up to and excluding that date. The Loan Notes will be redeemable at par (together with accrued interest) for cash at the option of the holders, in whole or in part, on each interest payment date from (and including) 31 March 2008. Arla Holding will redeem all outstanding Loan Notes at par (together with accrued interest) on 30 September 2012. Arla Holding may redeem outstanding Loan Notes at par (together with accrued interest) earlier if, at any time after the first interest payment date following the first anniversary of the date on which they were issued, 25 per cent. or less of the aggregate nominal amount of all Loan Notes issued in connection with the Scheme remains outstanding. 2. The Scheme will be conditional upon: (a) approval of the Scheme by a majority in number of Arla Foods UK Shareholders present and voting (and entitled to vote), either in person or by proxy, at the Court Meeting representing 75 per cent. or more in value of the Arla Foods UK Shares voted; Votes attaching to Arla Foods UK Shares controlled by Arla Holding or persons acting in concert with Arla Holding will not be exercised at the Court Meeting or at the EGM. Expected timetable of principal events: Posting of Scheme Document 15 February Court Meeting/EGM 12 March Scheme Hearing 2 April Capital Reduction Hearing 4 April Effective date of Scheme/Capital Reduction 5 April Latest date consideration posted to shareholders 19 April ......... I think I'll pass on the loan note option! D. |
Posted at 15/1/2007 19:58 by tiredoldbroker QuePassa, I think you are ignoring my point here. You again refer to DCG being on a p/e of 24, but you fail to make valid comparisons. That p/e relates to DCG's eps in the year to 31/3/06 and is the unadjusted eps - i.e. you have chosen the lowest possible basis for earnings for DCG without doing a comparable exercise for ARU.Even in that period, DCG reported adjusted eps (i.e. adding back exceptionals, just like ARU does) of 40.3p. You ignore the corporate activity by DCG since 31.3.06, including the deal to buy Express' doorstep business (described as "highly earnings accretive" for DCG), the sale of its commodity cheese business, and the very substantial St Hubert purchase. Partly due to these deals, DCG can put forwards a good case for steadily rising eps - from 40 in 2006 to 45 in 2007 and 52 in 2008, and better quality of earnings as well. If you were to have a fairly similar look at ARU you could say that in the year to Sept 05 ARU had earnings of 1.9p unadjusted - in which case the exit p/e at 71p would be over 37 ! For the year to Sept 06 ARU still only reported basic eps of 2p, ignoring the loss on discontinued operations, so the p/e for ARU comparable to the p/e of 24 you keep quoting for DCG is either 35 or 37, depending which year you take for comparison. If you want to base ARU's exit price on adjusted eps, you have to adjust DCG's eps the same way. In which case, ARU is still going out on a premium to DCG. So however you look at it, if you make a level playing field comparison, ARU is exiting on a higher p/e to that of DCG. But the basic fact remains that neither you nor anyone else have put forwards factually-based forecasts of higher future eps for ARU, and a business will, at the end of the day, have a value which is a multiple of earnings. For ARU, with limited and erratic prospects, and a patchy record, an exit p/e of over 14 is really quite a good price, and you have yet to show otherwise. |
Posted at 15/1/2007 17:34 by tiredoldbroker QuePassa, you say that Dairy Crest are on a p/e of 24 but the fact is that for the year to March 2007 they are forecast to have eps of 45.1p per share, rising in the year to March 2008 to 52.3p, so the prospective 2008 p/e at Dairy Crest's current 651p share price is around 12.4.For ARU, with a September year end, the forecast for 2008 (six months further away than for DCG) is 5.39p so the p/e at a 71p exit price would be 13.2. So ARU is going out on a premium to DCG, even though ARU already has a controlling shareholder, which effectively excludes any third party offers. ARu has a record over the last few years of really quite patchy earnings, even when "normalised" to reverse the exceptional items (which come up every year so are hardly exceptional any more !). An exit p/e of more than 14 times this year's forecast earnings seems like quite a full price, the rate of growth forecast is hardly stratospheric and frankly the exit p/e is higher than for many stocks showing real growth and a decent record. By all means refuse to accept the offer, you'll just become a dissenting shareholder with the offer proceeds held in an account until you do accept, with you unable to access the cash for reinvestment. So I don't see how you'll benefit or what the financial justification is. |
Posted at 15/1/2007 14:35 by gerry321 Come to think about it............One way to cheer up those who were depending on their ARU divi coming on time and not late would be to offer them an extra divi...... |
Posted at 15/1/2007 12:42 by damofarl quepassa; as i said before 72 was based on year high, and i fear that aru's response will be to you, that which amba put to them in 'agreeing' price.....the price is a 50% premium to pre announcement and a 12 month high (i think there will be a special divi), which in black and white represents a fair premium. We on here have argued before that the share price was engineered down by the heavy investment in plant (now finished, surprise, surprise). If they had merely churned assest, profits would have been higher for the last 2 years, and the share price would not have drifted down so much against both the market and their competitors. On that basis if the share price was say 60, and they approached with the current premium, 90 would have seemed 'generous', wouldn't you say? ARU also 'invested' a lot in winning major supermarket contracts, at low margin/cost to prove to the major retailers that they could deliver the national service required by them (previously, it was a bit regionalised). ARU have delivered on these contracts and their service is highly rated by these customers. In such a commodotized product, i think the service will give them leverage on contract renewals, at better margins, allowing their status as the 'biggest' to flow through in profit as well as volume. Also, ARU's drive to cut costs, prompted by the oil hike last year is starting to pay benefits...they use to pay people to take the rubbish away...now they get paid, just an indicator of the attention to detail which is sweeping through ARU, driven by amba's ETT Arla programme ('One Arla').I'm sure others have spotted the value, but with amba's holding and milk market share it won't be a uk dairy concern. Cashflow might attract someone, but i don' see any hidden property value (Stourton is a sale and leaseback), so I don't see private equity. That leaves say a European dairy/food combine? I don't know why amba/Camprini talks fell through, but if Camprini were to bid for Aru, it would put them in a strong position vis-a-vis amba would it not? One thing that came out ofthe weekend press was the price, so at least we were right that that wasn't the sticking point (Farmers Weekly says its the pensions)! Frankly, 71 plus share price divi is a done deal, and theres no option but to take the money...quepassa...w |
Posted at 10/1/2007 15:06 by damofarl Gerry/Quepassa, thanks your contributions/observAs others have voiced, i don't believe the hold up is price but administrative/fisca 1) Staplemead/Claymore jv's - partner have pre-emptive rights in case of change of ownership? 2) termination/renewal/ 3) outstanding legal actions 4) tax utilization 5) agreement with American loan note holders vis-a-viz tax/currency effecient payout 6) do major conracts have break clauses for 'change of ownership' 7) pension deficits/commitments 8) tidying up (amalgamation) of the number of different pension and share schemes into 1 9) AFMP - getting their approval and making loyalty agreements going forward to maintain retention of supply. All in all i can't believe its dragging on, but like your selves hope for news soon. D. |
Posted at 02/1/2007 13:51 by damofarl Happy new year.A few thoughts on previous postings; the deals still on, with the delay being related to fiscal tidying up rather than concrens over pension liabilities. Amba are fully aware of the pension requirements, and include them in their 04/05 accounts, so nothing has surprised them in htat regard. Notwithstanding the financial numbers posted by tiredoldbroker, i do believe the val;ue is strategic for amba. ARU is the biggest producer, by volume, but they've yet to translate that into the profits of RWN and Dairy Crest, or the rising share price ot those 2; if one says that these three have the market, then one has to ask if RWN, Dairy Crest have run ahead of themselves or ARU is lagging behind(or both!). As has been said the CC will not allow a takeover amongst the three, although a European co. would probably get the nod. there could also be consolidation amongst the coops, Milklink, Dairy Farmers of Gt. Britain etc. so there will always be 3/4 major players. I don't see anywhere that amba have a stated mission vis-a-vis ARU to make it member owned (AFMP would facilitate this greatly), although this could be a reason for takeover delay if they are trying to tidy it all up at the same time. An article on Farmers Weekly (last Nov.)interested me, synopsis below: 'The UK could be facing a shortage of milk by November 2011, which raises the prospect of milk imports, a new report has projected. Kite Consulting's Milk Forecasts report has warned that the UK is heading for its largest ever under quota position. "The exodus from the dairy industry is running at 7% and accelerating," said the report's co-author, dairy industry consultant John Allen. "In the next three years one in five dairy farmers will quit." Supply decline At that rate of attrition just 12,300 dairy farmers will be left in the UK by 2012. And with annual demand at 12.6bn litres if the decline continues supply will be as low as 12.68bn by 2011. This means by November of that year, when the seasonal downturn of supply is at its lowest, the UK could see a real milk shortage. "Less milk would be manufactured into cheese, butter or powder, drawing in imports to fill the shortfall and exposing us to world market prices and exchange rate fluctuations," Mr Allen warned. But Arla Chief executive Tim Smith said that importing liquid milk was unlikely. "Anyone contemplating importing milk is contemplating financial suicide. The eye-watering costs of transporting liquid milk from abroad make it unviable."'......... The last paragraph interests me most; Amba has a surplus of liquid milk, so if the above report is realised (surely supply and demand will kcik in?), UK milk will be used to meet liquid commitments, and the cheese/butter/powder could all be imported, with Amba/ARU best equipped of the three UK groups to take advantage. Thats one reason why id rather have amba 'shares', or have ARU kick about for another 18 months. Finally, until i see Amba's 05/06 ac's posted (still waiting?) with negative news on ARU, i believe the deal is very much on. Good luck all for the year ahead. D. |
Posted at 17/12/2006 13:30 by damofarl I'd agree the pensions are probably the main reason holding up announcement, bearing in mind there are a number of different schemes to deal with (Claymore, Express, Arla etc.). Another consideration (delay) maybe dealing with the ARU jv's such as Claymore/Staplemead etc,- their partners may have first refusal clauses in the event of takover.ARU's board may also being pushing for a higher price, but realistically this is a non starter with amba's 51%. I still stick with 72 as with their control amba can argue that this is at a 12 month high, and a 40% premium to preannouncement share price It would be hard for ARU to argue with the black and white of that, even though personally i think amba have cleverly engineered the price down. I don't doubt an announcement is forthcoming; amba's year end was the same as ARu's but they've yet to post 05/06 accounts, i think they're holding it back to put 'ARU full control' news in the Board's statement, some good news to smooth over the coop's members dissapointment last year at the Campini merger failing.At a guess of 72, i agree it seems strange that people are not taking the 10% upside, but then nothing is guarenteed; as for Wiseman/Dairy Crest laughing at the takeover, with ARU preoccupied and taking its eye of the ball, i'm not sure i would agree with this; whilst probably true of the last 2-3 years, i think amba's influence of ARU has been crucial in bringing a hotchpotch of disjointed assests to fruition, takinga strategic longterm view (rather than fire fighting the old Express/ARU way), and its very much buisness as usual for ARU. Personally, my regret is that the offer is (will be) cash, and not shares in a incorporated amba, as frankly i think (at whatever takeout price) amba are getting the cream of ARU cheaply, and amba (for a coop) seem rather astute in their worldwide dealings, and would itself get taken out. Just my own ramblings of course! D. |
Posted at 30/11/2006 22:18 by damofarl Gerry, thanks for your kind words; here's a few more thoughts;i'm no accountant, but when i read the a/c's there appeared to be no ghosts or extraorinaries. If you look at pension provision, i feel they've been a little conservative (i.e its better than it looks), and their are tax benefits for amba Theres only three main players, and whilst there was intense contract negotiations a while ago, they are all sitting on visible supply contracts to plan/budget going forward, so there is stability going forward (for all three). Arla Uk has stability of supply from AFMP so they don't have to worry about going to the farmers market price wise; they can (set) know what their costs are going ahead, and have anadvantage over RW and Dairy Crest in this regard. That said theres not much volume gain to be had by anyone, so putting the various companies efficiencies aside how can RW's share price double in 18 mths and ARU's drop by 40% (pre talks), with ARU being the biggest volume producer? O.k RW are probably more efficient than ARU, but i believe ARU has won contracts at minimal/loss margins deliberately to a) lower RW vol, volume being crucial and b) to validate the investment in new/updated state of the art dairies. c) earn credibility with customers going forward (the tesco's of the world are focused on price of course, but they also want deliverance of service and i think Arla is strong here). Long term this is a winner, as increases/decreases in volume have a disproportianate effect on profits in milk, with RW the loser and Arla the gainer. ARU have spent 29% ofthe market cap in the last 2 years on updating dairies.....the Locerbie investment was a masterstroke, and a sign of intent that RW WOULD have the fight taken to them; one has to understand the nature of national supermarket contracts aligned with nations (i.e. Welsh, Scottish )desire to see 'local' produce). ARU could not previously promote 'Scottish' milk as such as it might have been proccessed in Leeds or Manchester, but know they can. The takeover of safeways by Morrison only helped volume wise as Safeway was strong in Scotland, whereas Morrisons were non-existent The nature of the food industry is that audits are regular, if only for food health point of view, but quality customers such as M & S, Sainsbury, Waitrose will do their own; from this amba will now how they are performing, without appearing to be making a (takeover) inspection, or 'sniffing around' to much; everything they want to know is visible. Why did Arla Uk not do a share buyback when in the mid 40's? o.k. amba would get 51% of the benifit, but it would have lifted the sp, and hence the takeover premium-because amba didn't want it! Personally i think ARU shares are worth nearly a pound, yes seriously, they've took a hit on winning contracts, and a hit on updating dairies, but that cost has all come short term, for long term gain; i have to say that this strategic forward long term thiniking would not have come about without amba, but that in itself tells why i think 72 share price is the mark. I think for pi's ArlUk even with a continuing amba 51%, would be a better return than a takeover lonterm, as then ARU would reverse the benefit and effectively have gained 51% support for a leaner more efficient Co. Pi's have taken the hit and amba is going to get the cream.... Milk being the commodity market it is, commodity prices are paid; Arla's Cravendale is the only premium (pure) milk product, notwithstanding RW's 'Fresh'n'Lo' (which is really only of Scottish significance), and I think ARU is the only one innovating in this market. Sorry for rambling, but i wrote as i though; personally, i'd rather ARU continued as is, as i believe the profits (ex heavy previous investment) will flow through sharply, but that amba will get the benefits and not us; i stick with 72 and at current prices i would continue to buy for a quick 10% (6 weeks), or if a heavy investment you could turn a buck on the margin as noo downside on 72; amba will buy Arla, that is not in question, its when, but they won't overpay, as i agree that the deal has already beeen done; the delay is just tieing up the loose ends (AFMP, semployes share allocations (immediate on takeover i understand). tax benefit/implications Sit tight, but i don't think 80 (even though i do think its worth way more than that)D. |
Posted at 23/11/2006 19:02 by gerry321 Hi QueInteresting that no reason has been given for paying a dividend early. In the current bid situation... ...anything which impacts the deal and either helps a lower share price than expected to be more palatable to shareholders And/or provides an extra cost benefit to amba at no cost to the arla shareholders ..........is worth doing... ....perhaps bringing forward the divi date falls into this category But why bring forward a divi date? The obvious answer is to enable some or all Aru shareholders to receive a divi which they would not receive on the old date And what would disenfranchise a shareholder from receiving a divi on the old date ? Clearly........ not owning the shares on the old date How could this happen ? Well Either Owning "voting rights" of the shares is "temporary" and does not include owning the right to a divi on the old date...........these shareholders receive no benefit from bringing forward a divi date but have rights to vote for the takeover and negotiated an early divi date as a sweetener for the real owners who may have a 31 Dec year end Or Owning "voting rights of the shares is "permanent" but the shares will have changed hands (ie to amba) before the old date came around in jan and hence the "lost" divi needs to be added to the bid sp which may cause a disadvantage to the buyer at no cost to the seller or cause a disadvantage to the seller at no cost to the buyer What can be deduced therefore ?? 1 There is an advantage to one of the parties in bringing forward the divi date and hence the decision has probably been done as part of the negotiations Also 2 The release of the accts could not happen before 23 Nov hence some of the numbers in these accts being disclosed to the funds for the first time could be relevant to securing their agreement ...........for sure the deal is going ahead... My hunch is that a determined effort is being made to reach a deal quickly with an egm targeted for Dec .....hope this helps |
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