Warrnambool board gives approval of revised takeover bid by Saputo

By Rizza Sta. Ana

Nov 15, 2013 09:13 AM EST

The board of directors at Warrnambool Cheese and Butter Factory Co Holdings Ltd had given its unanimous recommendation of Canadian dairy company Saputo Inc's revised takeover bid.

In a statement, Warrnambool Chairman Terry said on behalf of the board, "The board's recommendation reflects the increased cash consideration offered by Saputo and the compelling timing and execution certainty that it provides, particularly compared to the highly conditional Murray Goulburn proposal."

Warrnambool added that it was prepared to pay up to AUD1.31 per share in special dividends should Saputo obtain certain milestones that would allow the latter to distribute to shareholders certain tax credits.

Saputo increased its bid to 12.5% on Friday. Saputo would be acquiring one Warrnambool share for AUD9. The price would put the Australian dairy company at AUD505 million or USD470.84 million. The takeover of the Australia's oldest dairy company would make it the most expensive dairy company in the world in terms of price-to-earnings ratio.

The Canadian dairy company had been battling it out with Warrnambool shareholders Murray Goulburn Co-operative Co Ltd and Bega Cheese Ltd in a bidding war for the Australian company. Warrnambool was considered a valuable asset when one has a controlling interest in the company as Warrnambool has export connections to Asia. These connections would enable a foreign firm to tap into the rising dairy produce and high-tech milk extracts markets.

According to a Reuters report, Saputo would be able to clinch its victory against other bidders should it remove all conditions from its bid and agree to reduce the number of business days to pay Warrnambool to five.

On Thursday, Bega attempted to turn Warrnambool into its favor when it raised its cash and share offer to USD461 million without any attachments unlike the rest of the bidders. Murray Goulburn, on the other hand, extended a AUD9 per share in cash with a condition that it will obtain a majority control and approval from antitrust regulators.

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