Warrnambool board recommends revised Saputo bid

Fri Nov 15, 2013 6:49am EST
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By Lincoln Feast and Jackie Range

SYDNEY (Reuters) - Canadian dairy company Saputo Inc (SAP.TO: Quote) raised its takeover offer for Australia's Warrnambool Cheese and Butter Factory Co Holdings Ltd (WCB) WCB.AX by 12.5 percent on Friday, and Warrnambool's board unanimously recommended it.

Saputo, Canada's largest dairy company, has been bidding against WCB shareholders Bega Cheese Ltd (BGA.AX: Quote) and Murray Goulburn Co-operative Co Ltd, chasing WCB for its export connections to Asia, where demand for both for its basic dairy produce and high-tech milk extracts is surging.

Saputo's new bid, at A$9 per share, values Australia's oldest dairy company at A$505 million ($470.84 million), making it the world's most expensive dairy company on a price-to-earnings basis.

To win the battle Saputo said it would remove all conditions from its offer and shorten its payment terms to five business days.

WCB said on Friday that after careful consideration of the three proposals received over the past few days, it decided to recommend Saputo's new offer, in absence of a superior proposal.

"The board's recommendation reflects the increased cash consideration offered by Saputo and the compelling timing and execution certainty that it provides, particularly compared to the highly conditional Murray Goulburn proposal," WCB Chairman Terry Richardson said in a statement.

WCB also said it intended to declare and pay special dividends of up to A$1.31 per share if Saputo reaches certain thresholds that would allow it to distribute certain tax credits to WCB shareholders.

Bega on Thursday raised its cash and share bid for WCB to $461 million and did not attach conditions to its offer like other suitors.   Continued...