Tuesday, May 15, 2012

Wiseman milk price forecast correct

When on January 16, 2012  Müller Dairies bought Wiseman for £279.2m, the deal was said by Robert Wiseman to make strong strategic sense, to have synergy and the maximise the 'complementary positions' of the two companies.

The 360p/share deal looked good for Wiseman shareholders, who had been trading the stock at 250p. I discovered that a large proportion of the purchase was from a Deutsche Bank letter of credit for €250m, at a rate greater than 5%.

At the time we concluded that Müller would be wanting it's Wiseman dairy farmer suppliers to contribute to the cost, as the opportunities for an uplift in prices, despite the operating synergies, seemed limited.

So it is no surprise to hear that on April 30th Wiseman announced at they would be cutting farm gate prices by 2p (6.6%) to 26.42 p/standard litre.