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Saputo wins majority control of Warrnambool

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Canadian dairy giant Saputo won majority control of Australia's oldest dairy processor after four months of a bitterly contested takeover battle, with acceptances to its bid creeping over 50%.

Saputo revealed that holders of a further 2.7m shares in Warrnambool Cheese and Butter Factory had tendered to its bid, lifting its stake from 47.9% to 52.7%.

The news comes four months after Australia's Bega Cheese kicked off the bidding war with a cash and shares offer worth initially Aus$5.78 a share, valuing Warrnambool Cheese and Butter Factory at some Aus$320m.

Saputo's bid, which won approval from the target company's board, is priced at Aus$9.00 a share in cash – a sum which rises to Aus$9.20 cash now that the 50% threshold has been reached.

Should Saputo go on to win a stake of more than 75%, the bid will rise to Aus$9.40 a share, with a maximum Aus$9.60 a share on offer should Saputo win acceptances from holders of more than 90% of Warrnambool stock.

At that price, Saputo's offer would value Warrnambool's equity at about Aus$540m.

The crossing of the 50% threshold also triggers an extension to February 4, from January 22, in the closing period for accepting the bid.

Rival suitor's comment

The statement also appears to dash the last chance for Murray Goulburn, Australia's top dairy exporter, to win control of Warrnambool, for which it has bid Aus$9.50 a share, but whose offer became ensnared in anti-trust concerns.

Advisers to Murray Goulburn - which failed four years ago to succeed in a Warrnambool bid despite raising its offer three times to eventually Aus$4.35 a share - have raised the possibility for the co-operative to remain a minority investor.

The co-operative said on Wednesday that "given Saputo's offer period is automatically extended for a further 14 days, Murray Goulburn will now commercially assess this development, including in relation to MG's 17.7% shareholding in Warrnambool".

Bega sells out

Bega Cheese on Thursday gave up its last hopes of takeover success, selling its 18.8% stake in Warrnambool to Saputo – for a pre-tax profit of up to Aus$68.2m at the maximum Aus$9.60-a-share offer price.

Bega said that its board was "conscious of the significant value of the Warrnambool shareholding, and its obligation to shareholders to continue to make sensible investment and capital management decisions".

The sale of the stake "is a better financial outcome for Bega Cheese and its shareholders than a successful takeover at the current bid value".

Bega shares closed on Wednesday in Sydney at Aus$4.80 - some 50% above their level before it made its bid for Warrnambool, a reflection of the capital gains but also including some uplift to account for the potential for the group to become a takeover target as well.

Warrnambool shares closed up 1.2% at Aus$9.42, more than double their price before Bega opened the takeover battle.

By Agrimoney.com

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