The three-way battle for Australia’s oldest dairy firm took a fresh twist on Friday when a regulator temporarily stopped Canadian suitor Saputo Inc. from processing acceptances for an offer that has the backing of the target’s board.
The blow to the A$515 million bid from Canada’s biggest dairy processing firm for Warrnambool Cheese and Butter Factory Co. came in a ruling from Australia’s Takeover Panel. The halt came after Murray Goulburn Co-operative, a rival suitor with a higher offer, asked the panel to block the Saputo bid.
The temporary block on Saputo’s bid can last up to two months, buying its rival valuable time to make the case for its own offer, sweetened to A$530 million on Thursday. The interim block is procedural and doesn’t provide any indication of the panel’s future intentions.
The offer from Australian ag co-op Goulburn needs approval from a separate regulator, the Australian Competition Tribunal, meaning it cannot make its offer for Warrnambool unconditional. The tribunal will take three to six months to reach a decision.
“If you didn’t have these orders todayyou’d still probably take the Saputo offer, on the basis a bird in the hand is worth two in the bush,” said John Kettle, a partner with law firm McCullough Robertson and an expert on competition law.
“What they’ve managed to do now is muddy that, muddy the waters there.”
Montreal-based Saputo — one of the world’s top 10 dairy processors, Argentina’s third largest dairy firm and also one of the top three cheesemakers in the U.S. — said Friday it had increased its holding in Warrnambool to 9.6 per cent.
The Takeover Panel said that Saputo must stop processing acceptances and provide a statement as soon as practicable to Warrnambool shareholders to explain the effect of the interim order. The system of interim orders is designed to maintain the status quo until the panel can consider an application in detail.
Saputo declared its A$9 bid unconditional on Monday and said it would hike its offer if it won control. But Murray Goulburn appealed to the panel to block Saputo’s revised bid.
Murray Goulburn and Bega Cheese Ltd., also vying to acquire Warrnambool in the battle, argue the decision under Saputo’s revised offer to drop A$1.31 per share in proposed dividends means shareholders will not have access to A56 cents in franking credits.
Murray Goulburn, Saputo, Bega and Warrnambool weren’t immediately available for comment.
— Jane Wardell and Jackie Range are Reuters correspondents based in Sydney, Australia.
Saputo making white-knight play for Australian dairy firm, Oct. 7, 2013