UPDATE 2-Canada's Saputo to take over Warrnambool as Australia's dairy industry consolidates

Tue Oct 8, 2013 12:58am EDT
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* Canada's Saputo swoops on Warrnambool with $370 mln bid

* Foreign interest in Australian dairy assets on rise

* Saputo would consider more acquisitions

By Maggie Lu Yueyang

SYDNEY, Oct 8 (Reuters) - Canada's Saputo Inc swooped on Warrnambool Cheese and Butter Factory Company Holdings Ltd, potentially kickstarting a wave of foreign purchases in Australia's A$4 billion ($3.8 billion) a year dairy industry.

Canada's largest dairy producer knocked out a significantly lower bid from Warrnambool's majority shareholder, fellow Australian company Bega Cheese Ltd, to win approval from the board for its A$392.7 million ($370.10 million) bid.

Australian dairy farmers have been battered in recent years by a powerful combination of factors, including a supermarket price war that slashed domestic wholesale prices, a strong Australian dollar that crimped exports and a drought that sent cattle feed costs soaring.

While there are bright spots on the horizon - the Australian dollar is falling, demand from the Asian middle class is rising - many local dairy farmers probably won't be able to hang on for the good years in the face of well-funded foreign predators.

"We've got significant enquiries ... from both major local producers as well as offshore investors looking for exposure to Australian agriculture," said Jesse Manuel, a rural and agribusiness specialist at Colliers International with a number of dairy farms on its books. "Those investors are predominantly from Asia including Singapore and China, also New Zealand."   Continued...