Introduction Australian Dairy Farms Group (AHF) is Australia’s first dairy company to be listed on the ASX on October 2014. AHF is currently holding six farms and approximately 3,000 dairy livestocks, plant and equipment and water licences to operate the farms. AHF takeover Camperdown Dairy Company Pty Ltd (CDC) on Friday, 15 April 2016, as a wholly owned subsidiary. The premiums paid in this acquisition is in cash, which is attributable to the market reaction and share price of AHF. AHF believes this acquisition will underpin its long-term earnings and extend the company’s product range and profit margin. This report will examine AHF corporate governance, how this acquisition would create value, and the methods of payment used.
Question
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Processing capability
CDC facilitate 36 million liters of raw milk annually into a full range of dairy products and able for significant production expansion.
Strong customer’s relationship
Strategic relationship with blue-chip customers; Woolworths and Aussie Farmers Direct.
Expanding existing own brand
CDC processes Woolworth’s “Farmers Own” brand of premium milk and dairy product under its own Camperdown Dairy brand. Opportunity to expand high value-added product range.
Growing export opportunity
CDC export business is expanding overseas, and is one of only a small number of Australian dairy companies with China Inspection Quarantine (CIQ) certification for the rapid clearance of fresh milk into China.
Management
CDC has a highly experienced management team.
Market leader opportunity
Joint venture processing of organic butter with the largest organic milk producer in Australia.
Financial synergies created on FY2016 and FY2017:
Sales growth
139.89%
Gross income growth
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West (2016) suggested, “Deals have about 50% chance of long-term success when market was initially sceptical,” meaning that initial market reaction is less reliable as it is exposed to biases and incorrect valuation. On average, the acquirer’s gains are zero, target’s gains are significantly positive, and overall takeover yields positive gains. To identify the market reaction towards an acquisition financed by stocks, external drivers such as CAR, tax, merger type, window period, and investor attention are used. Ideally, CAR is mainly used because it is observable and it is a portion of acquirer stock return from the takeover announcement, not from the ordinary market movement. However, CAR cannot be used as a primary source in measuring the stock return, as it is often inaccurate and fluctuates over
The timing of the Hatcher’s change in business model could not have come at better time. The local food movement in the Nashville area was gaining prominence and Nashville became one of the most desirable cities to live and work in. The Hatcher’s close proximity to Nashville allowed them to capitalize on these favorable market conditions and quickly establish a niche market. Currently, over 40 vendors sell or use Hatcher milk in their products. Vendors include convenient stores, restaurants, bakeries, grocery stores, other farm stores etc.
Currently, Devondale has more than 2500 suppliers / shareholders that are participating in this large export company. The majority of the products are often being distributed to many countries such as Asia, Middle East, and North America and Americas. In international market Devondale is seen as Australian number one dairy company and seek to
From a financial and marketing standpoint, the effects have been catastrophic. In some areas, milk production has decreased by an average of two liters daily and calving index (efficiency at which new calves are produced) went down by an average of twenty days (Davies NP). Th...
This report aims to evaluate how M&S applies the expectations and requirements of corporate governance based on their recent annual report, review of composition of...
The current Production Capacity is Low to face the upcoming competition-The dairy currently produces 10000 liters of milk per day even after 30 years of presence in the market. This will certainly affect the chances to take advantage of the current growing market and to manage the consumption cycles of the industry. The question of whether to decide on the expansion of production capacity: With an incredible growth expected in the industry, the issue that the management faces now is, whether to increase the production capacity or not. This is very much needed as the expansion of production capacity will equip the company to supply and cater to the demand as well as attain economies of scale, which can be used as a competitive advantage against the new entrants. However, this calls for capital investments on the assets required for expansion.
Gregory, h. J., 2012. Twelve Key Corporate Governance Issues. Board Agenda, Mon Dec-Jan, p. 29.
BR was sold to Delta Foods in 1996 for US $2 billion. At this time, it was one of the largest fast-food chains in the world generating sales of US $6.8 billion. DF purchase of BR brought in a new cultural paradigm. DF is an individualistic, aggressive growth company with brands they believe are strong enough to support entry into new overseas markets without the need for local partnership. The DF strategy is one of direct acquisition and JV’s were not part of their strong suit. DF strategic implementation is based on hiring local managers directly or transferring seasoned managers from their soft drink and snack food divisions. The DF disdain for JVs is clearly reflected by their participation in only those JVs where local partnering was mandatory (e.g. China) to overcome regulatory barriers to entry. JVs had been the predominant strategy for BR which was unlike the DF outlook. Terralumen’s strategy was misaligned and out of sync with the DF strategy. This was unlike the complementarity that existed with BR’s strategy. This misalignment began to affect the JV relationship that had worked well with BR in the initial years. The failure of Terralumen and DF to recognize this fundamental cultural difference between their operational strategy styles i.e. Individualistic and Collectivism leads to their inability to proactively create steps for better alignment in the early period after acquisition, creating uncertainties and difficulties for both corporations. There is a lack of communication and virtually absence of trust between two new partners. DF appeared to be flexing its muscles in the relationship and using a more masculine approach compared to Terralumen’s more feminine approach. Both the corporations are strategically involved in a complex situation where they appear reluctant to address the issues at stake and move ahead together. The DF strategy of
Companies.” Wall Street Journal, Eastern edition ed.: 1. Nov 26 1999. ProQuest. Web. 19 Apr. 2014.
Have a very long history over 140 years Operated factories in 77 countries in all six continents, a truly global company Considered the innovation leader in the global food and nutrition sector with 3500scientists in company R&D network Offering thousands of local products, research and development capabilities.
Week 5 Lecture. (2006). FIN 325 Mergers, Acquisitions, and International Finance. Retrieved from rEsource on July 7th, 2006 from https://ecampus.phoenix.edu/secure/resource/resource.asp
Loos, N. (2006). Value creation in leveraged buyouts: Analysis of factors driving private equity investment performance. Wiesbaden: Deutscher Universitäts Verlag.
The force of globalization sped up by highly technological advancement rapidly increases the uncertainty and complexity of the international business environment. To prosper, organizations must adapt to the changing environment (Waddell, Creed, Cummings & Worely, 2014). On a global stage of competition, Fonterra Co-operative Group Limited (Fonterra) has maintained its momentum of growth and reserved its renowned place among the top five world’s dairy giants in 2013.
with the London Dairy brand and since people belonging to this customer segment are generally
Cadburys rely on a number of primary sector goods including cocoa beans, sugar cane and milk in the production of their goods.