Bega Cheese shareholders have signalled they will not stand in the way of the company's takeover of Warrnambool Cheese and Butter, as its chairman signalled his intention to pursue the bid amid rival proposals.
Shareholders approved the lifting of a 10 per cent shareholder cap at Bega Cheese's annual meeting on Tuesday. The removal of the cap for would allow investors who hold WCB stocks to be issued with shares beyond the present limit.
The constitutional change, which would be limited to takeovers or similar arrangements, signalled the NSW producer's continued push to merge with WCB, a western Victorian business.
WCB has seen its shares rise by almost 80 per cent after Bega and two other companies - Canadian dairy giant Saputo and the Murray Goulburn Co-operative - joined the bidding war.
The share price rise meant Bega Cheese's share and cash bid valued WCB at $385 million as of Monday, just below Saputo's $391 million, Bega Cheese chairman Barry Irvin said. WCB shares fell to $8.10 on Tuesday, just below the record closing share price of $8.11 the day before. Bega Cheese shares closed down 1.96 per cent to $4.
"The Australian dairy industry needs to consolidate and needs to be in Australian hands," Mr Irvin told shareholders. "Bega's offer continues in our mind to be a compelling one ...
"We believe the common cultures should see these businesses come together."
Mr Irvin said Bega Cheese would retain WCB's brand name and operations, with the merger producing $7.5 million in savings.
The offer would lead to a combined market capitalisation of about $845 million, with revenues of more than $1.5 billion.
Mr Irvin said Bega Cheese reserved the right to revise its WCB offer, which was made on September 12 and which is open until November 28.
PAC Partners agribusiness analyst Paul Jensz said Bega Cheese remained "pretty well positioned" for a successful merger with WCB.
"They are probably the cleanest opportunity out there from an [ACCC] approval point of view. And they've left their powder dry a little bit on the price and if they need to lift the price, they'll consider it," Mr Jensz said.