One of the best performers on the S&P/ASX 200 index on Wednesday has been the Bega Cheese Ltd (ASX: BGA) share price.
In morning trade the diversified food company's shares jumped as much as 8.5% higher to $5.49
Why did the Bega Cheese share price jump higher today?
Today was judgment day for Bega Cheese in respect to legal proceedings commenced by Kraft Heinz in the Federal Court in connection with the packaging design of the peanut butter products that were part of the Mondelez grocery business it acquired in 2017.
According to the release, Kraft Heinz has been seeking "to prevent Bega Cheese from using the packaging trade dress, comprising a jar with a yellow lid and a yellow label with a blue or red peanut device with the jar having a brown appearance when filled."
The company rejected this and stressed that it acquired all rights to the peanut butter packaging trade dress as part of its purchase of the Mondelez business.
Pleasingly for the company, this morning the Federal Court confirmed Bega Cheese's right to continue to use the trade dress associated with the peanut butter products.
The release explains that the Federal Court judgment has determined that Kraft Heinz's use of the trade dress is misleading or deceptive under Australian law.
Should you invest?
I think this is a very positive outcome for the company and removes an element of uncertainty which has been weighing on its shares.
Overall, although its performance has been a little underwhelming this year, I think it could be an opportune time to make a patient long-term investment along with fellow food shares Costa Group Holdings Ltd (ASX: CGC) and Freedom Foods Group Ltd (ASX: FNP).
Especially given their reasonable valuation. I estimate that Bega's shares are changing hands at around 19x forecast FY 2020 earnings at present.
