Greenhill advised Lion on strategic dairy factory stake

Since September when Bega Cheese Ltd launched the first bid for Warrnambool Cheese and Butter Factory Ltd, one very interested party has followed developments closely.

Lion, a unit of Japan’s beverage giant Kirin Holdings Ltd, has become increasingly anxious as first Saputo Inc and then Murray Goulburn Co-operative Ltd trumped Bega’s takeover offer for Warrnambool, a company that Lion has had a relationship for years. On Victoria’s Great Ocean Road at Allansford, Lion’s factory sits alongside Warrnambool’s. Lion cuts and wraps its Coon and Cracker Barrel cheddar, thanks to supply from Warrnambool.

After Saputo’s $8 bid for Warrnambool on Friday that seemingly trumped rivals, Lion decided to act. It called in its long time advisor, Greenhill & Co’s Roger Feletto. The banker advised action: Lion would accumulate a significant stake in Warrnambool, effectively making it a player in the takeover battle.

Using broker RBS Morgans today, Lion bought a 9.99 per cent stake in Warrnambool, paying about $50 million. That kind of money is small cheese for Lion’s parent Kirin, a company with a $15 billion market value.

“Lion felt more comfortable having a shareholding in Warrnambool than sitting on the sidelines watching development play out,” says one person close to the transaction. 

Bega, Murray Goublurn and Lion collectively have a 45 per cent stake in Warrnambool, perhaps ending Saputo’s conditional offer for the company that requires a 50.1 per cent acceptance.

Feletto's advice is a master stroke and places Lion at the center of any Warrnambool deal.

Feletto and Lion have had a decade-long relationship. The co-head of Greenhill in Australia has advised Lion on its acquisition of beer brewers Little Creatures and James Boags.

But the Greenhill banker is just one of a long list of advisors on the Warrnambool battle, including Rothschild and Rabobank who are advising Saputo. CIMB are the bankers to Warrnambool, Lazard Ltd are advising Murray Goulburn’s advisors while Kidder Williams counsels Bega.

But Lion and Feletto may now prove the king maker in any deal as it holds power to extract the optimum commercial and strategic relationship with Warrnambool from any acquirer.