Saputo makes final, sweetened Warrnambool offer after regulatory probe

Tue Dec 17, 2013 1:45am EST
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By Jane Wardell

SYDNEY (Reuters) - Canada's Saputo Inc (SAP.TO: Quote) stepped up its bid for Australia's Warrnambool Cheese and Butter Factory Holdings Co WCB.AX on Tuesday, aiming to knock out its rivals with a final sweetened offer after receiving a regulatory rap over the knuckles.

Saputo's unconditional cash offer of A$515 million ($461 million) for Australia's oldest dairy company will rise as high as A$549 million ($492 million) if it receives acceptances of 90 percent or more of Warrnambool shareholders.

That looks tough on paper given takeover rivals Bega Cheese Ltd (BGA.AX: Quote) and Murray Goulburn collectively own about 35 percent of Warrnambool shares, while Japanese beverage giant Kirin Holdings Co Ltd (2503.T: Quote) holds a further 10 percent.

But analysts say Saputo's offer - now rising from A$9.00 to A$9.20 on 50 percent acceptances, A$9.40 on 75 percent acceptances and A$9.60 on 90 percent acceptances - is the clear frontrunner as Murray Goulburn is hamstrung by regulatory hurdles and Bega's offer lags on price.

"In my view it means Murray Goulburn's offer is now not good enough," said Shannon Rivkin, director of Rivkin Securities. "They probably have to come back with an increased offer if they want to stay in the game, otherwise they have to accept the their fate and probably even sell to Saputo."

The takeover battle for Warrnambool has been one of the most hotly contested in Australia in recent years, with Saputo's final offer marking the 10th bid or revised bid since Bega kicked off the bidding war in mid-September.

Acquiring Warrnambool would give Saputo, which has the backing of the Australian company's board, a platform for rapidly growing sales of both traditional dairy products and high-tech milk extracts into China.

Saputo agreed to raise its offer price above 75 percent acceptances and extend the deadline to January 10 to appease Australia's Takeovers Panel, which was harshly critical of previous revisions that gave shareholders special dividends at certain acceptance levels.   Continued...

The Warrnambool Cheese and Butter Factory is seen in the town of Warrnambool, located around 265 kilometers (165 miles) southwest of Melbourne November 17, 2013. REUTERS/Sonali Paul