Scottish milk producer Robert Wiseman Dairies
The recommended cash offer of 390 pence per share is at a 60 percent premium to Robert Wiseman shares' close on Thursday, a day prior to the announcement of the offer.
It's a fair price, analyst Charles Pick of Numis Securities said, pointing out the tough market conditions in which Robert Wiseman operates.
First take on it was in the 365-410 pence type region. 390 is towards the upper end of that.
Shares of Robert Wiseman shares were trading up 18.5 percent at 388.75 pence at 1051 GMT on the London Stock Exchange.
Robert Wiseman, which started off selling milk from a family farm in East Kilbride in the 1940s, said in a trading update on Monday it expected profits for the fourth quarter ending March to be hit due to higher price of raw milk and diesel.
Have they (Robert Wiseman) remained independent, the numbers for the current financial year and perhaps next year might have been trimmed back by the market in terms of forecast, Pick said.
With shoppers' disposable incomes squeezed by rising prices, muted wages growth and government austerity measures, UK retailers are struggling to drive productivity and deliver growth. In November, Robert Wiseman had reported a fall in its full-year profit.
The company, which provides about a third of Britain's milk, said the deal complements its positions in the yoghurt, potted desserts and fresh milk markets. Robert Wiseman had reported total sales of 917.5 million pounds for the financial year ended April 2, 2011.
Mueller, which is owned by privately held Theo Mueller, expects to fund the deal through its existing cash resources and the proceeds of a 250-million-euro ($316.7 million) letter of credit with Deutsche Bank AG
The company, well-known for its Mueller Corner, Mueller Light and Mueller Rice brands in the UK, already has the support of about 54.9 percent of Robert Wiseman's shareholders.
Mueller, which has an annual turnover of about 2.2 billion euros, said Wiseman's executive management team will continue to lead the business, and that it would maintain its headquarters in East Kilbride.
It looks a win-win deal pretty much all around, analyst Pick added.
Rothschild is the financial adviser to Mueller, while Greenhill and Investec are joint advisers to Robert Wiseman.
(Reporting by Tresa Sherin Morera in Bangalore; Editing by Maju Samuel)