Saputo Tops Bega Bid for Warrnambool with $366 Million Offer

October 8, 2013 09:22 AM
 

Canada’s largest dairy processor buys Australian butter and cheese factory to target rising dairy demand in Asia.

David Stringer

Saputo Inc., Canada’s largest dairy processor, agreed to pay about C$378 million ($366 million) for Warrnambool Cheese & Butter Factory Co., bettering a rejected bid by Bega Cheese Ltd. Shares in the Australian producer jumped to a 9-year high.

Saputo offered A$7 cash a share for the maker of brands including Sungold and Warrnambool cheddar, the Montreal-based company said in a statement. The deal, recommended by Warrnambool’s board, is priced at 8.4 percent more than Warrnambool’s close of A$6.46 yesterday.

The Canadian company’s bid tops a cash and share offer from Bega Cheese, Warrnambool’s largest shareholder, made last month. Acquiring the Victoria state-based producer, which operates two dairy processing plants in southeastern Australia, will allow Saputo to target rising demand in Asia for dairy products, Chief Executive Officer Lino Saputo said.

"Warrnambool would become an important part of Saputo’s global operations," CEO Saputo told reporters today on a conference call. It would provide a "main platform from which to service demand for the Asia Pacific region."

Warrnambool advanced 11 percent to A$7.18 in Sydney, the highest since May 2004. The stock has almost doubled this year.

Murray Goulburn Cooperative Co., which had its own takeover bid for Warrnambool rejected in 2010 and is the second largest shareholder, will "now take time to consider its options," it said in a statement today.

An application to Australia’s Foreign Investment Review Board was made at the end of September seeking approval for the deal, Saputo told reporters.

Bega Cheese holds 18 percent of Warrnambool stock and Murray Goulburn holds 16 percent, according to data compiled by Bloomberg.

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