December 20, 2013 / 3:48 AM / 5 years ago

Warrnambool to double H1 profit on strong dairy demand

SYDNEY, Dec 20 (Reuters) - Australia’s Warrnambool Cheese and Butter Factory Holdings Co, the company at the centre of one of the country’s most hotly contested takeover battles in recent years, said on Friday it will double its first-half earnings.

Warrnambool, which is backing a bid from Canada’s Saputo Inc , said strong international dairy demand and pricing, a falling Australian dollar and an improved product mix were driving profits.

Chairman Terry Richardson said the first half would provide a “robust foundation” for the balance of the year.

Earnings before interest, tax and depreciation and amortisation (EBITDA) in the six months to Dec. 31 would rise around 100 percent from A$29.3 million ($25.94 million) in the previous corresponding half, the company said. Full-year EBITDA is pegged at between A$47 million and A$52 million, compared with A$25.5 million.

Saputo earlier this week increased its unconditional cash offer of A$515 million to as much as A$549 million if it receives acceptances of 90 percent or more of Warrnambool shareholders.

As of Monday, Saputo had received acceptances worth 16.9 percent, taking it close to the 18 percent stakes held by each of Murray Goulburn and Bega.

Bega, which kicked off the takeover war with a bid in mid-September but has since lagged the more aggressive Murray Goulburn and Saputo, appeared to pull out of the race altogether this week.

Bega said it would not extend its offer period beyond Friday and would instead “consider its options regarding its strategic shareholding”, a review that could include a sale of the stake.

That would leave Murray Goulburn as the only competitor to Saputo, but its A$530 million offer is conditional because it requires competition regulator approval that could take months. Saputo’s offer, meanwhile, is due to close on Jan. 10.

Warrnambool shares were up 0.4 percent at A$9.23, while Bega shares were down 2.2 percent at A$4.39 in a broadly higher market.

Warrnambool is due to report its interim results on Feb. 28.

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