Bega Cheese is poised to make a decision on raising its bid for Warrnambool Cheese & Butter.
The NSW dairy company is involved in a three-way bidding war for WCB with Murray Goulburn and Canada's Saputo.
Bega adviser David Williams, of Kidder Williams, said he expected Bega's board to meet on Thursday afternoon, when it will discuss two aspects of the bid. "A, is whether we go completely unconditional, and B is whether we need to increase the bid," Mr Williams said.
Analysts were tipping Bega to raise its offer of $2 cash plus 1.2 Bega shares, but Mr Williams said that might not be necessary.
The value of Bega's bid rose above $450 million last week after New Zealand dairy operator Fonterra bought 6 per cent of the company.
Analysts said the Fonterra raid gave Bega's offer more clout. "Fonterra investing in Bega rather than Warrnambool shows that Bega is their favoured partner here in Australia," PAC Partners agribusiness analyst Paul Jensz said.
But WCB chief executive David Lord warned shareholders that Bega's current share price didn't represent its fundamental value and was subject to market volatility.
Bega's shares dropped 3.2 per cent on Wednesday, valuing the bid at $7.77 a share, 23¢ below Saputo's all cash offer of $8 a share but above Murray Goulburn's $7.50 cash a share.
"We're already up there with Saputo, we're above Murray Goulburn. We're in the box seat," Mr Williams said.
In Bega's favour is that the competition regulator has said it will not oppose a Bega merger with WCB.
Murray Goulburn is still awaiting regulatory approval and Saputo's offer is dependent on clearance from the Foreign Investment Review Board. Saputo must also gain 51 per cent of the company, a tough task considering Bega owns 17 per cent, Murray Goulburn another 17 per cent, and Japanese dairy and drinks group Kirin 10 per cent.
"You'd have to say that the Australians have their noses ahead in that game at this point," Mr Jensz said.
Bega's board meeting comes after Fonterra bought Tasmanian yoghurt company Tamar Valley Dairy out of administration on Wednesday for an undisclosed price. Fonterra is a supplier to Tamar Valley Dairy. The deal includes processing equipment, intellectual property and trademark.