Bega Cheese: Bidding to Bring Vegemite Back Home

Posted: 11 Dec 2017

Date Written: November 22, 2017


In January 2017, the leadership team of Bega Cheese—the Australian dairy company—was considering a bid for Mondelēz International’s Australia and New Zealand (ANZ) grocery business which included several leading consumer brands including Vegemite, the iconic Australian spread. The team must decide whether to bid for the division and, if so, how much to offer and how to finance the all-cash bid. These decisions were difficult because this would be Bega’s largest acquisition ever and it would extend the firm outside of its core dairy business. In addition to the valuation and financing issues, the leadership team must decide whether shifting from the current B2B business model (manufacturing and processing dairy products) to more of a B2C business model (a producer of branded consumer goods) makes sense strategically.

The case has four objectives:

1) to illustrate basic discounted cash flow (DCF) analysis (FCF/WACC valuation) in the context of an iconic national brand;

2) to analyze the economic, strategic, and financial implications of an acquisition opportunity;

3) to illustrate the "value drivers" framework and the factors that determine firm value; and

4) to explore the managerial choices between profit and growth and between stability and risk taking.

Keywords: Mergers & Acquisitions, M&A, DCF valuation, value drivers, value creation, corporate scope, iconic brands, bidding strategy, consumer goods, dairy industry, diversification

JEL Classification: G34, G32, L25

Suggested Citation

Esty, Benjamin C., Bega Cheese: Bidding to Bring Vegemite Back Home (November 22, 2017). HBS Finance Case #218-001, Available at SSRN:

Benjamin C. Esty (Contact Author)

Harvard Business School ( email )

Boston, MA 02163
United States

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