Murray Goulburn Co-operative is set to reap a $51 million profit after bowing to Canadian dairy giant Saputo in the race for Warrnambool Cheese and Butter Factory Holdings Ltd.
In a statement to the Australian Securities Exchange, Murray Goulburn said it intended to seek approval from the Australian Securities and Investments Commission to withdraw its bid for WCB.
The group said it would receive at least $92.9 million in cash proceeds after selling its 17.7% stake in WCB, with a $51 million gain on investment before tax and costs.
Murray Goulburn has also withdrawn its application to the Australian Competition Tribunal (ACT) to have its bid for WCB authorised on the grounds that a takeover of WCB by Murray Goulburn would be of benefit to the public.
The move means rival bidder Saputo will now hold more than 75% of the Victorian dairy company's stock, meaning its offer price will increase to $9.40 per share.
Saputo had offered an unconditional $9.00 per WCB share, with the offer price rising if certain share thresholds were met.
The offer price rose to $9.20 when Saputo's stake passed 50.1%, to $9.40 at more than 75%, and will go up to $9.60 when it passes 90%.
The group's managing director, Gary Helou, said the sale was an "excellent financial outcome".
"These cash proceeds will support our plans to reinvest in our business and to grow market share in Australia and expanding internationally, further assisting us to deliver our goal of increasing the underlying farmgate returns," Mr Helou said.
Mr Helou said while Murray Goulburn was committed to its offer and was confident it had a compelling case before the ACT, it was obliged to its co-operative shareholders to maximise financial returns.
"Whilst we are disappointed to have missed out on the opportunity to acquire WCB, we are pleased that our involvement in the bidding process drove a genuine auction and that all WCB shareholders have benefited as a result, including Murray Goulburn," Mr Helou said.
However Murray Goulburn said it was "a lost opportunity for the Australian dairy industry" that the Foreign Investment Review Board (FIRB) had approved Saputo's offer for for WCB in a "significantly shorter timeframe" than the process Murray Goulburn was required to follow.
Murray Goulburn, Saputo and Australia's Bega Cheese Ltd were involved in a prolonged three-way tussle for control of WCB.
Bega allowed its bid to lapse in December.