Canadian Manufacturing

Aussie dairy firm raises bid in contest against Canada's Saputo

Murray Goulburn Co-operative hiked its all-cash bid by 5.6 per cent for Warrnambool Cheese and Butter

MONTREAL—An Australian dairy producer has raised the stakes in its bidding war with Saputo Inc., which wants to buy Warrnambool Cheese and Butter as an entry into a key new market.

Murray Goulburn Co-operative, Australia’s largest dairy products exporter, has hiked its all-cash bid to AU$9.50, about 5.6 per cent above its previous bid of AU$9.

At that price, Warrnambool is valued at about AU$531.7-million, the equivalent of about C$512.3-million at current exchange rates.

Montreal-based Saputo has offered up to AU$9.20 per Warrnambool share if it gets majority ownership, or AU$9 if it doesn’t get more than half of the Australian company’s stock.

The board of Warrnambool Cheese and Butter said it will review Murray Goulburn’s revised bid and advised its shareholders to take no action at this time.

But Warrnambool says its Australian suitor has continued to attach conditions on its takeover offer, including getting approval for the deal from competition authorities.

Warrnambool has supported Saputo’s previous bids but is open to accepting a superior offer.

Saputo doesn’t have a significant presence in the Australian market and sees Warrnambool as a way to expand its holdings in a key region outside its North American base.

Murray Goulburn asked the Australian Takeovers Panel earlier this week to intervene, saying investors have been fed “misinformation as to the terms of the Saputo bid.”

It says Warrnambool’s decision to no longer pay up to AU$1.31 per share in special dividends means Warrnambool shareholders can’t access 56 cents per share in “franking” or tax credits from Saputo’s earlier offers and implies a reduction of the true value of Saputo’s offer.

Saputo declined to comment on the its rival’s application for intervention but said it now owns just under 4.8 per cent of Warrnambool’s shares.

Its bid requires the formal approval from the foreign review board, but Australia’s treasurer has said it wouldn’t block Saputo’s takeover bid from being decided by WCB shareholders.

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