Saputo has reacted to new offers from rivals and returned to the table with a higher bid for Australian dairy Warrnambool Cheese and Butter Factory.
The Canadian dairy giant today (15 November) announced it is offering WCB investors A$9 a share in cash, up from its previous bid of A$8 a share.
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The value of Saputo’s new bid only matches that made by Australian rival Murray Goulburn earlier this week.
However, Saputo said it intends to make its offer unconditional. Its previous two bids have required the support of WCB investors owning over half the business.
That condition had appeared a challenge as its two rivals for WCB – Murray Goulburn and another Australian dairy firm, Bega Cheese – own a combined 36% of the takeover target. Kirin Holdings, the Japanese food and drink group, also owns 10% of WCB, a stake it snapped up when the first bids for the business came in.
WCB’s board, which has recommended each of Saputo’s three offers, has again backed the company.
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By GlobalDataSaputo said its latest offer was “superior” to the bids from Murray Goulburn and another Australian dairy firm, Bega Cheese.
The company said Bega Cheese’s cash-and-shares offer was “uncertain and subject to market volatility”. Saputo also pointed to the conditions attached to the Murray Goulburn all-cash A$9-a-share bid.
“The Saputo offer … provides greater certainty for Warrnambool shareholders in contrast to the Murray Goulburn proposal, which is subject to no objection by the Australian Consumer and Competition Commission or granting of authorisation by the Australian Competition Tribunal in relation to the proposed transaction,” the company said. “Both the timing and outcome of that process are uncertain and likely to take several months.”
Two weeks ago, the chairman of the ACCC reportedly said a Murray Goulburn takeover of WCB could be a “concern”.
Despite the three-way battle for WCB, the company’s board has consistently backed Saputo’s offers.
However, there have been concerns in Australia about WCB falling into foreign hands. Some industry watchers have supported a Murray Goulburn takeover, favouring the creation of an Australian dairy group capable of competing on the global stage, not least in Asia.
Demand for dairy is booming in Asia and this potential has proven a key factor in the interest in WCB.
In its statement today, Saputo insisted it was “best placed to accelerate the growth in Warrnambool’s business”.
“Saputo has the strategic intent and financial capacity to invest further in Warrnambool,” it said. “Saputo’s strategy in acquiring Warrnambool is to position Warrnambool as the centre of its operations in Australia and its main platform from which to service the demand for dairy products in the Asia Pacific region.
As one of the largest international dairy companies, Saputo believes that by working with Warrnambool’s management team and investing in Warrnambool’s operations, it can greatly assist Warrnambool’s future development and accelerate its growth, nationally as well as internationally. This in turn should lead to a greater demand for milk, which should be to the benefit of Warrnambool’s suppliers.”
It added: “Moreover, Saputo does not have any existing operations in Australia, so the acquisition of Warrnambool by Saputo will not reduce the choices available for farmer suppliers.”
