Saputo’s bid for Australian dairy firm gets boost from regulator’s concerns

MONTREAL—Saputo’s bid to acquire Australia’s oldest dairy processor got a boost this week after Australia’s competition regulator reiterated that rival Murray Goulburn’s offer for Warrnambool Butter & Cheese could reduce competition for purchasing raw milk in the country.

The Australian Competition and Consumer Commission also questioned whether an acquisition by the country’s largest dairy processor would positively impact volume or the value of dairy exports.

The agency made similar comments when Murray Goulburn tried to acquire Warrnambool in 2010.

The commission is assisting the Australian Competition Tribunal, which is set to begin hearings on Murray Goulburn’s bid on Feb. 10.

Murray Goulburn’s offer is conditional on receiving the tribunal’s approval along with it obtaining more than half of Warrnambool’s shares.

It holds about 17.7 per cent, about the same as Saputo.

Warrnambool’s board formally rejected Murray Goulburn’s AU$9.50 per share bid Jan. 7, saying it is “highly conditional and uncertain.”

It described Saputo’s unconditional offer that is set to expire Jan. 10 as “superior” based on value, certainty and timing.

Saputo is currently offering AU$9 per share if it doesn’t get a majority of WCB’s stock but said it would pay more if it gets more than 50 per cent of outstanding shares.

Saputo will pay AU$9.20 per Warrnambool share if it gets a simple majority, AU$9.40 per share if it gets 75 per cent of the total and AU$9.60 per share if it gets at least 90 per cent of WCB’s stock.

Analyst Irene Nattel of RBC Capital Markets said the competition commission’s negative view “does not auger well for Murray Goulburn.”