Saputo keeps Australian dairy war alive with offer extension

Canadian dairy giant Saputo extended its offer for Australia’s Warrnambool Cheese and Butter Factory on Friday, just hours before the bid deadline, ensuring a heated battle for Australia’s oldest dairy firm will wage on.

Montreal-based Saputo announced a two-week extension for what it’s now declared to be its “last and final” offer of A$515 million (C$497 million), until Jan. 22, keeping up the pressure on bidding rival Murray Goulburn Co-operative.

At stake is a platform for rapidly growing sales of both traditional dairy products and high-tech milk extracts into China.

Saputo, Canada’s largest dairy firm, is now the biggest shareholder in Warrnambool, with acceptances worth 21.39 per cent of the company.

That puts it just ahead of former bidder Bega Cheese, which holds 18.8 per cent of the company, and Murray Goulburn, which owns 17.7 per cent. Japanese beverage giant Kirin Holdings holds a further 10 per cent.

Saputo’s unconditional all-cash offer of A$515 million, backed by Warrnambool, will rise as high as A$549 million (C$530 million), if it receives acceptances of 90 per cent or more of Warrnambool shareholders.

“Other than possible automatic extensions required under Australian law, there will be no further extensions to the offer period,” Saputo said in a release.

The A$530 million bid from Murray Goulburn, Australia’s largest dairy foods company, is dependent on regulatory approval, which is not expected until the end of next month. The company has said it may increase its stake in Warrnambool via market purchases.

Bega, which kicked off the bidding war in September but dropped out last month, has yet to decide what it will do with its stake. Bega CEO Barry Irvin said on Thursday it will consider both its shareholders and the broader market.

Irvin has sided with Murray Goulburn in its submission to the Australian Competition Tribunal, saying it did not believe a takeover by Murray Goulburn would lessen competition.

Kirin bought its stake in October to protect its distribution agreement with Warrnambool and has said it will not use it as a “foothold to become involved in a bidding war.” — Reuters, with files from Network staff

Related story:
Saputo making white-knight play for Australian dairy firm, Oct. 7, 2013

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