Shares in Murray Goulburn's listed entity soared as the beleaguered Australian dairy giant, dragged into a loss by an ill-fated China expansion, said it had received "a number of" takeover proposals, and had entered talks.
Shares in MG Unit Trust, which offer exposure to Murray Goulburn, soared 22% in Sydney at one point, to Aus$0.945, before easing back to close at Aus$0.885, a gain of 14.2% on the day, and their best close in three months.
The jump followed the announcement by the co-operative, Australia's largest dairy processor, that it had received "a number of confidential, non-binding indicative proposals" from suitors.
The approaches have "ranged from the sale of certain assets to whole-of-company transactions", Murray Goulburn said, adding that that it was "engaging with a number of parties to assess their proposals".
However, the statement added that it was "too early to make any comment about valuation or implementation" of any deal.
Furthermore, the co-operative denied that it had received an offer valuing MG Unit Trust shares at Aus$1.20, as had been stated in some media reports of an approach from Shanghai-listed Inner Mongolia Yili Industrial Group, a Chinese dairy processor with revenues of some $9bn last year.
Yili Industrial itself overnight issued a statement terming the reports "untrue", but acknowledging that it had made a "cautious, non-binding strategic development programme proposal" to Murray Goulburn.
A takeover by a Chinese bidder would complete a reversal for Murray Goulburn, whose fall to a takeover target has been caused largely by damage sustained in a Chinese expansion drive.
The co-operative last month reported a Aus$370.8m loss for the year to the end of June, after causing uproar among farmers by in April 2016 cutting its milk prices by up to 20%, a decision which sparked legal action from, the Australian Competition and Consumer Commission.
However, the legacy of Murray Goulburn's foreign expansion is a brand, in Devondale, which is "highly popular in China", according to China information group Red Pulse.
"The struggling business creates a great buying opportunity for mainland dairy firms which covet Australian quality dairy supply."
Other Chinese bidders said to be interested including a subsidiary of China Mengniu Dairy, and China Resources Ng Fung, a Chinese food group which already owns a 7.1% stake in MG Unit Trust.
Indeed, with China a huge importer of milk's products, the country's dairy industry has been an enthusiastic bidder for sector assets in countries from Belarus to New Zealand.
Earlier this year, Yili came close to buying US organic yoghurt producer Stonyfield Farm, with an $850m bid.
However, many Western foreign dairy groups, including Denmark-based Arla, New Zealand's Fonterra and Canada's Saputo, which bought Australia's Warrnambool Cheese & Butter three years ago, are also reported to have been interested in bidding for at least part of Murray Goulburn.
Local bidders – which, unlike foreign rivals, would not need approval from Australia's Foreign Investment Review Board – are said to include Bega Cheese.
A full takeover of Murray Goulburn would require the approval of 90% of its farmer owners, which has provoked some speculation that sales of assets from its portfolio of dairy brands and 10 processing plants may prove more likely.
By Mike Verdin