Australia's takeover regulation, condemned in November for
barring a foreign purchase of GrainCorp, was on Thursday criticised for undermining
a domestic bidder, as the country's oldest dairy group was bought by Canada's
Murray Goulburn, Australia's largest dairy good group, said
that it had been prevented by red tape from competing "realistically" in the
bidding battle for Warrnambool Cheese and Butter Factory.
While Saputo received approval in November, the month after
making its offer, Murray Goulburn's – higher - offer remained tied up with a domestic
anti-trust investigation by the Australian Competition Tribunal even until
Thursday, when the co-operative conceded defeat in the bid battle.
'Unable to compete
"Murray Goulburn considers it a lost opportunity for the
Australian dairy industry that Saputo received Foreign Investment Review Board approval
in a significantly shorter timeframe than the process Murray Goulburn was required
to follow," the Victoria-based co-operative said.
"From the point that Saputo was granted FIRB approval, the Murray
Goulburn offer was not capable of being acted on by WCB shareholders in the
same time period.
"Consequently, Murray Goulburn was not able to compete
realistically on a level playing field with a competing international bidder
The comment strikes a chord with many investors, with one
telling Agrimoney.com that the Australia's competition regulation "had
prevented the best deal from being done.
"Murray Goulburn was best placed to create the most value
from a takeover. Being a domestic bidder, it could release more synergies from
crunching its operations together with Warrnambool's," the investor said.
"That is before any flag-waving considerations about
creating a national champion."
The criticism contrasts with the attacks on Australia's
government after it in November prevented US-based Archer Daniels Midland from
buying GrainCorp, the Australian grain handler, saying that the
"contentious" $3.1bn deal was "contrary to the national
Murray Goulburn's comments came as it admitted defeat,
again, in an attempt to buy Warrnambool, selling its 17.7% stake to Saputo,
whose holding rose above 75%, triggering an increase to Aus$9.40 a share in its
Even so, the offer remains below the Aus$9.50 a share bid by
The co-operative will receive at least Aus$92.9m for the
sale, creating a pre-tax gain of about Aus$51m, for what it termed an "excellent
Saputo's achievement of a 50% stake in Warrnambool earlier
this week had left Murray Goulburn focusing on "an obligation to our shareholders
to maximise the financial outcome and focus management time on growing a strong
and globally-competitive co-operative", the group said.
Appetite for deals
Nonetheless, despite failing for the second time in four
years in an attempt to buy Warrnambool, Murray Goulburn said that it had not
given up its takeover ambitions.
"While the Australian dairy industry remains deeply
fragmented, Murray Goulburn is committed to consolidation of the sector and
will continue to pursue future consolidation opportunities as they arise," the co-operative
Gary Helou, the Murray Goulburn managing director, said that
the group had a "vision to create a significant, Australian-owned, globally relevant
"There is a significant opportunity for us to capture the
global opportunity and deliver its upside to Australian farmers and their rural
communities – ultimately the only way the industry will be able to arrest the
decline in production we have experienced over the last 10 years."
United Dairy Power, Australia's largest privately-owned milk
supplier, is also up for sale, and has trumped its preference for a domestic bidder,
although Chinese suitor Bright Food Group is believed to be circling the