Saputo Raises Warrnambool Bid to $473 Million in Dairy Fight

November 15, 2013 03:41 AM


The three-way contest for Australia's Warrnambool has more than doubled the target’s market value in the two months since Bega, its largest shareholder, made an initial offer.

Saputo Inc., Canada’s largest milk processor, raised its offer for Warrnambool Cheese & Butter Factory Co. 13 percent to A$505 million ($473 million), matching a rival bid and winning support of the dairy producer’s board.

Saputo increased its offer to A$9 cash a share from A$8, the Montreal-based company said today in a statement. That matches a bid from Murray Goulburn Cooperative Co., while Bega Cheese Ltd. has made an offer of 1.5 shares plus A$2 cash. Bega’s stock closed at A$4.75 yesterday, making its proposal worth A$9.13 for each share in Warrnambool, which supplies milk to make Philadelphia cream cheese.

The three-way contest for Warrnambool has more than doubled the target’s market value in the two months since Bega, its largest shareholder, made an initial offer. Bidders are competing to add Warrnambool’s export infrastructure amid rising demand in Asia.

"Saputo’s strategy in acquiring Warrnambool is to position Warrnambool as the center of its operations in Australia and its main platform from which to service the demand for dairy products in the Asia-Pacific region," the company said.

Investors should accept the Saputo offer unless a superior proposal is received, Warrnambool said in a separate statement.

Warrnambool closed at A$9.10 in Sydney yesterday and trading was halted today pending Saputo’s revised offer. Saputo rose 0.5 percent to C$48.95 at 9:41 a.m. in Toronto.

Kirin Stake

The bidding war comes as China, the world’s most populous nation, is setting records for milk-powder imports while dairy demand is rising in India, Indonesia and Vietnam, according to Warrnambool. The company is based in Allansford in Australia’s Victoria state.

Bega holds 18 percent of Warrnambool, maker of brands such as Sungold milk and Great Ocean Road cheese, and Murray Goulburn owns 17 percent, according to data compiled by Bloomberg.

Japan’s Kirin Holdings Co. bought a 9.99 percent stake in Warrnambool last month, seeking to protect an arrangement under which the producer supplies at least 12,000 metric tons of cheddar each year for its Australian unit’s Coon and Cracker Barrel cheese brands. Fonterra Cooperative Group, the world’s largest dairy exporter, said Nov. 1 it had acquired a 6 percent stake in New South Wales state-based Bega.

Murray Goulburn, the only of the three bidders still to require approval from regulators, will lodge submissions with the Australian Competition Tribunal by Nov. 29 and expects the process to take about 90 days, Murray Goulburn Managing Director Gary Helou said Nov. 13.

Bidding for Warrnambool began when Bega made a stock-and- cash proposal that was valued at A$5.78 a share on Sept. 12. The next month, Saputo offered A$7 a share and Murray Goulburn bid A$7.50. Saputo raised its proposal to A$8 a share on Oct. 25.

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