Lion's shares 'no hurdle' to Warrnambool Takeovers Murray Goulburn roadshow

Murray Goulburn boss Gary Helou does not believe Lion's 10 per cent holding in Warrnambool Cheese & Butter will be a roadblock in the milk co-operative's fight to control the rival dairy processor.

Mr Helou said he had been in talks with Lion, which is owned by Japanese food conglomerate Kirin, and would honour its cheese cut and wrap agreement with WCB if Murray Goulburn was successful in acquiring the milk processor.

"We will respect and fulfil and enhance every commercial deal that Warrnambool has today, including the Lion deal," he said.

He was speaking in Warrnambool, after making a pitch to WCB shareholders to accept his $505 million takeover offer.

"Lion is a big player in the Australian dairy industry. We have a good relationship with them and we are always talking about aspects of the industry and aspects of improving efficiencies for mutual benefits."

Lion bought its stake in WCB last month to protect the viability of its cheese brands Coon and Cracker Barrel, rather than seek to control the company.

WCB supplies Lion with its entry-level cheeses. In return, Lion cuts and wraps WCB's cheeses. It is an agreement aimed to create cost efficiencies in a high-volume, low-value product, which is frequently the target of heavy supermarket discounting.

Mr Helou said it was Murray Goulburn's aim to lift its holding in WCB from about 17 per cent to 90 per cent so it could compulsorily acquire the rest of the company. But its bid of $9 cash a share is being hampered by a lengthy approval process from the Australian Competition Tribunal, which could take up to six months.

Rival Canadian bidder Saputo, which has the backing of WCB's board, upped the ante on Monday, offering WCB shareholders an extra 20¢ a share, or $10 million, if it secured 50 per cent of the company.

But what at first seemed a windfall might create another twist in the three-way battle for WCB. Mr Helou and the other bidder, Bega Cheese, indicated they would ask the Takeovers Panel, a peer review body that regulates Australian corporate control transactions, to examine Saputo's amended offer.

Mr Helou said the $9.20 bid was effectively a reduction from Saputo's previous offer because of the removal of special dividends. WCB was going to pay shareholders 56¢ in dividend franking credits if Saputo reached 50 per cent. "That sounds to me like a reduction," he said. "I don't understand it and our advisers are going through this, and if we have to go to the Takeovers Panel, we will do that."

Mr Helou said it was not his intention to halt the progress of Saputo's bid by going to the panel. "This is about truth."

But he again spoke of his frustration that Treasurer Joe Hockey gave Saputo foreign investment approval, while Murray Goulburn's bid was "handicapped" by the competition tribunal.

"I think there is a breakdown in the structure and the logic when [the Foreign Investment Review Board] accelerates approval while there is a potential tribunal that needs to go through. I think the government and the lawyers need to think through that structural, I call it, misalignment."

Mr Helou said he "felt" for WCB shareholders who have to decide whether to sell to Saputo or Bega now or wait to see if the tribunal approves Murray Goulburn's bid. But he urged them not be "bullied" into making a decision.

"I don't envy your position. I feel for it, I agonise over it," he told a gathering of about 70 WCB shareholders in Warrnambool on Tuesday. "You need to make a call at the end of the day, and it's hard walking away from ... cash."

WCB chief executive David Lord has warned shareholders Murray Goulburn's offer is uncertain and other bidders could "evaporate" during the tribunal process.

But while Mr Helou is determined to see Murray Goulburn take over WCB, he has a back-up plan: "If you don't give us your shares, you should give us your milk. I'll be blunt about this because I think it's in your interest."