The company last month lifted its offer for WCB to A$8/share, trumping bids by two Australian processors and cornerstone shareholders Murray Goulburn and Bega Cheese. WCB’s board has recommended Saputo’s latest offer to shareholders.
WCB chief executive David Lord says the board continues to focus on maximising value for shareholders. “So, we carefully considered the proposal from Murray Goulburn including seeking further information on their proposal. However, subsequent to those discussions, we received the revised Saputo offer which we consider superior both in terms of price and conditionality to the alternatives.”
Some analysts believe both Murray Goulburn and Bega Cheese may bow out of the race. However, it’s not clear whether both processors will sell their stake in WCB to Saputo. And, in an interesting development last week, Japanese conglomerate Kirin, which owns the former National Foods and Dairy Farmers businesses in Australia, bought a 9.99% stake in WCB.
Bega, which already owns 18% of WCB, launched its takeover bid in September for the listed processor. Bega, also a listed dairy processor, offered 1.2 shares and A$2 cash for each WCB share. But the offer was rejected by WCB directors as inadequate.
Saputo made its move early last month by offering A$7/share. WCB directors unanimously recommended Saputo’s bid at that time, “in the absence of a superior proposal”.
But the bidding war was turned on its head by Murray Goulburn, which has a 17% stake in WCB. It announced a A$7.50/share offer. Murray Goulburn notes that Saputo’s offer is still subject to conditions, not least approval from the Foreign Investment Review Board.
“Murray Goulburn believes resolution of the future ownership of WCB will be a long process and that WCB shareholders should not act prematurely in relation to giving up control of their shareholdings,” it says.
Australia’s largest dairy processor says its bid is “reasonable and in the national interest” that Saputo’s FIRB application to acquire WCB not be decided until Murray Goulburn’s own application for authorisation was decided by the Australian Competition Tribunal.
Saputo chief executive Lino Saputo Junior says his company wants to use WCB as a springboard for Asian expansion and pledged that farmers – who control about 40% of WCB’s shares – would not see milk prices decline under new ownership.
“Warrnambool will become the platform for Saputo in Australia.”
– Comment pg 30
