The Australian Competition and Consumer Commission (ACCC) would approve a Bega takeover, saying there was limited overlap between Bega and WCB in relation to the acquisition of raw milk in the dairy region in southwest Victoria as well as areas of northern Victoria. Fonterra recently bought a 6% stake in Bega.
However, ACCC chairman Rod Sims has said it has concerns over Murray Goulburn’s proposed acquisition.
MG, which withdrew from its takeover bid of WCB three years ago after the ACCC released a preliminary report outlining issues of concern, has chosen to bypass the ACCC this time.
It will seek formal merger authorisation through the Australian Competition Tribunal, in a process which could take up to six months, which applies a net public interest test in contrast to the ACCC’s focus on competition.
However, the ACCC will remain closely involved.
The tribunal does not have its own permanent staff and the ACCC will be required to submit a report detailing its views and any concerns about impacts to competition.
Saputo sought approval from the Foreign Investment Review Board for its proposed takeover but had not heard from it at the time of its initial offer.
Although Bega has official approval, it must ultimately win the approval of shareholders for its proposal.
Its original offer for all WCB shares at a price of 1.2 Bega shares plus A$2 cash for every WCB share continues to rise as its share price does.
It leapt 26% in the week after it gained ACCC approval and Fonterra bought a 6% stake. Although share prices
have been changing daily since Saputo made its intentions known, the Bega price remains very much in the ballpark.
Even if Saputo and Murray Goulburn win official approval, they must overcome similar hurdles.
Saputo is seeking 50.1% of WCB and 46% is owned by its competitors Bega, MG and Lion, which bought 10% of WCB for A$51 million.
MG must convince shareholders to accept its bid, which at time of press was A$7.50 cash, compared to Saputo’s offer of $8 cash a share.
The competition has pushed WCB’s shares from A$2.50 12 months ago to A$8.50 earlier this month.
