BEGA Cheese shareholders have approved the lifting of a 10 per cent shareholding cap that would allow its Warrnambool Cheese and Butter bid to be carried out if it is successful.
On Tuesday morning the company held its AGM where all eyes were on the issue of the shareholder cap, which required a change to the company’s constitution.
A majority of shareholders voted for the constitutional change, which followed a speech by executive chairman Barry Irvin where he detailed why a merger with WCB would be appropriate.
Bega Cheese shares were down 1.96 per cent to $4 about 12.30pm.
Shares closed 5.15 per cent higher to $4.07 on Monday.
WCB shares were slightly down Tuesday, trading 0.25 per cent lower at $8.09.
They closed 2.79 per cent higher to $8.11 on Monday.
The Bega Cheese offer currently lags behind that of Canada’s Saputo and that of Victoria’s Murray-Goulburn.
Bega’s Cheese’s bid was a mix of cash and Bega Cheese shares.
The constitutional change was driven by concerns there could be WCB shareholders who couldn’t accept Bega Cheese’s share offer without being affected by the share cap.
However Mr Irvin and the board of directors at Bega Cheese noted in the preparation of information memorandum in the AGM agenda that “there are no Warrnambool Cheese and Butter shareholders who could accept the offer that would breach the existing shareholding limit”.
At the AGM Mr Irvin detailed Bega's desire to pursue its offer for WCB, reserving its right to change the bid.
"The Australian dairy industry needs to consolidate and needs to be in Australian hands," Irvin says.
"Bega's offer continues in our mind to be a compelling one ... We believe the common cultures should see these businesses come together."
Mr Irvin rejected concerns that by raising the shareholder cap Bega Cheese itself could be a target of foreign ownership.
For anyone to gain a controlling interest in Bega Cheese it would still require a special resolution of 75 per cent of the current shareholders.
“Our view is the business is not for sale,” he said.