Saputo's offer for Warrnambool leaves door open for better bid

Mon Nov 18, 2013 1:02am EST
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By Jane Wardell

SYDNEY (Reuters) - Saputo Inc's SAP.TO failure to deliver a knockout offer in the three-way battle to take over Australia's oldest dairy company is leaving the door open for a better bid.

The target Warrnambool Cheese and Butter Factory Co WCB.AX surged to a record A$9.39 in Sydney trading on Monday, fuelled by market speculation that the months-long takeover battle has further to run.

The dairy company has doubled in value since Bega Cheese Ltd (BGA.AX: Quote), its biggest shareholder, made the first takeover approach in September. Some analysts say the sector risks becoming overvalued.

Warrnambool now has a market value of around A$520 million ($490 million), surpassing Saputo's latest A$505 million, or A$9 per share, offer made late Friday. That matched the A$9 per share bid by Murray Goulburn Co-operative Ltd, though that offer is still pending approval from regulators.

Bega Cheese Ltd's (BGA.AX: Quote) most recent offer of A$2 cash and 1.5 Bega shares per Warrnambool share puts its bid at A$9.22 per share currently.

"There's some level of anticipation there might continue to be a bidding war between the three companies," said Steven Daghlian, market analyst at Commonwealth Securities.

Murray Goulburn Managing Director Gary Helou told the Australian Financial Review that his company was considering lifting its bid, but did not specify how high.

Analysts warn that Murray Goulburn, which has a 17 percent stake in Warrnambool, will need to take its offer beyond A$10 per share to have any hope of winning approval from the Warrnambool board, which has thrown its weight behind Saputo's offer.   Continued...