Bega Cheese holds back in three-way bidding war for WCB

Bega Cheese began the battle for Warrnambool Cheese & Butter but three months on it appears to be the first casualty of the bidding war.

Bega Cheese began the battle for Warrnambool Cheese & Butter but three months on it appears to be the first casualty of the bidding war.

The NSW-based company issued a statement to the ASX on Wednesday saying it would not extend its offer for the milk processor.

Bega has secured only a handful of acceptances since it made its bid in September, sparking a three-way bidding war with Canada's Saputo and Australia's biggest dairy company, Murray Goulburn.

The limited acceptances, which slightly extended Bega's holding of more than 18 per cent, was despite its offer being unconditional.

The company said it would "consider its options regarding its strategic holding in WCB" after its offer closes at 7pm on Friday.

Bega has offered $2 cash plus 1.5 Bega shares for every WCB share, valuing its bid at about $8.60.

Bega's announcement came after rival bidder Murray Goulburn flagged doubts about Saputo's revised offer for WCB, questioning its ability to pay $9.60 a share. Saputo lobbed a four-tier offer for WCB on Tuesday to appease the Australian Takeovers Panel.

Under the fresh offer, which is final, shareholders will be paid $9 cash, which will rise according to Saputo's level of ownership: $9.20 at 50 per cent, $9.40 at 75 per cent and $9.60 at 90 per cent.

Murray Goulburn managing director Gary Helou urged shareholders to hold on to their shares, saying there was a "significant risk" that Saputo would not be able to pay those prices.

Mr Helou said Murray Goulburn's bid was the superior offer, at $9.50 cash, despite it being conditional on approval from the Australian Competition Tribunal and acquiring at least a 50 per cent stake.

The battle to secure a majority stake in WCB is increasingly becoming a tough task, considering all three bidders hold significant chunks of the company. Murray Goulburn has about 17 per cent, Bega Cheese owns more than 18 per cent, while Saputo's acceptances are almost 17 per cent.

The competition tribunal's decision on the Murray Goulburn bid is expected by late February.

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