Murray Goulburn Co-operative Co Ltd, the second-biggest shareholder in Warrnambool Cheese and Butter Factory Co Holdings Ltd, raised its takeover offer for the Australian dairy company to A$505 million ($470 million), trumping Canada's Saputo Inc's bid.

Murray Goulburn, Saputo and top WCB shareholder Bega Cheese are locked in a three way battle for WCB, banking on increasing Asian demand for its basic dairy produce and high-tech milk extracts. 

The A$9 per share cash bid for WCB is a 20 percent increase on Murray Goulburn's earlier offer and a 12.5 premium to Saputo's offer, which on Tuesday won a recommendation from the WCB board and an approval from the Australian government. 

Shares in WCB, which have almost doubled since Bega kicked off the bidding war in September, closed on Tuesday at A$8.54.