$1.5b United Malt bid sticks, surviving earlier profit warning

afr.com:

United Malt has avoided the fate of a lower bid from French suitor Malteries Soufflet despite the Australian-based supplier of a key ingredient in beer having posted disappointing earnings during due diligence.

The $5-a-share official bid from Malteries Soufflet, valuing the equity at almost $1.5 billion, matches an indicative price given in March when the foreign rival began combing the books of Sydney-based United Malt.

United Malt chief executive Mark Palmquist. Arsineh Houspian

The latest offer was revealed by The Australian Financial Review’s Street Talk column, and United Malt’s board recommended the bid to shareholders.

Morgans analyst Belinda Moore said there was a risk Malteries Soufflet, as an industry player, would come back with a reduced offer after United Malt in May posted poor results for the first six months of its financial year.

“We view the offer price from Malteries Soufflet as a great outcome for shareholders given the execution risk involved in delivering [United Malt’s] turnaround strategy over the next few years,” she said in a client note.

Shares in United Malt rose 39¢ to $4.79 during trading on Monday.

Malteries Soufflet, whose backers included private equity giant KKR, is part of the InVivo Group, and acquired Belgium’s Castle Malting earlier this year. It has said acquiring United Malt would reinforce its “presence in the high-value craft beer market” while expanding its footprint into new strategic markets.

United Malt is the world’s fourth-largest commercial maker of malt with 12 plants in Canada, the US, Australia and the UK, and operates a distribution service for craft brewers and distillers.

It posted a half-year loss of $13.8 million, although it said underlying earnings before