Shares in the hotly contested dairy company Warrnambool Cheese and Butter have fallen amid concern a blocking stake by Lion could see Saputo retreat from its knock-out offer.
Japanese-owned brewer and dairy company Kirin bought a 10 per cent stake in WCB through its Lion subsidiary on Tuesday, complicating efforts by the three companies vying for control of the prized dairy group.
Shares in Warrnambool fell 5 per cent to close at $8.36 on Wednesday, after rising to $9.30 on Tuesday.
On Wednesday, Canadian dairy major Saputo issued its bidding statement to Warrnambool shareholders. Its offer of $8 per share has been unanimously backed by the Warrnambool board over earlier offers by Bega Cheese and Murray Goulburn, both major shareholders in the target.
Bega Cheese and Murray Goulburn maintain their efforts to take over the company. While Lion has claimed it does not intend to make an offer for Warrnambool, its stake splits WCB between three major shareholders and potentially creates a roadblock for other suitors.
Adding to shareholder angst is an impending decision, expected on Thursday, by the Australian Competition and Consumer Commission on whether an earlier takeover proposal by Bega Cheese can proceed.
Analysts said the 10 per cent stake in WCB would give Lion a seat at the table on decisions about the company's future, should all other major shareholders agree to the Saputo offer. This could lead to a messy ownership structure that would be difficult to bring under one umbrella.
RBS Morgans analyst Belinda Moore said it was still likely that other takeover offers would emerge.
"You've got three strategic shareholders on register now," she said.
"These guys have 10, 18 and 17 per cent. Saputo has the highest offer, but both Bega and Murray Goulburn have the right to increase their stake over the coming days."
Bega, which started the bidding battle with an initial takeover offer, maintained it was best positioned to take over the company, given it was closer to regulatory approval.
Lion's strategic stake in WCB safeguards its cheese deal with the dairy group. Warrnambool makes all Lion's flagship entry-level cheese brands, namely Cracker Barrel and Coon, at its Allansford plant.