Murray mulls higher WCB bid

DataRoom: Group to apply for Aust Competition Tribunal clearance next month.

Murray Goulburn Co-operative will submit an application to the Australian Competition Tribunal and a bidders statement by mid November as part of its attempt to acquire Warrnambool Cheese and Butter Factory (WCB) as it contemplates trumping Saputo Inc’s $8 a share offer for Warrnambool.

The Victorian dairy cooperative expects the Australian Competition Tribunal to take a minimum of three months and a maximum of six months to consider its application to take over Warrnambool.

Murray Goulburn believes its bid for Warrnambool will be looked at in a favourable light as it plans to create a global cooperative dairy giant that will have an incentive to offer the farmers the best price for their milk while keeping profits in local communities so rural areas can benefit.

Concerns Western Victorian dairy farmers will not get a good price for their milk if Murray Goulburn buys Warrnambool, New Zealand’s Fonterra is the other milk buyer for the region’s farmers, are overblown, says Murray Goulburn.

Fonterra and Murray Goulburn would compete fiercely for milk supply and pay a fair price to farmers, the cooperative says.

Moreover, the cooperative structure is incentivized to ensure farmers are rewarded fully for their product compared to a listed company structure that may seek to suppress milk prices and take profits out of the region.

A bidders statement will detail the rationale and financing of its takeover that Murray Goulburn believes offers Warrnambool suppliers, shareholders and the Western Victorian community better long-term returns than rival bidders Saputo or Bega Cheese (BGA).

Still, Murray Goulburn acknowledges Saputo’s superior offer on Friday of $8 a share compared to its $7.50 a share bid earlier this month as well as its access to $1.03 billion credit line from its two banks.

But Murray Goulburn hints it is studying ways to bolster its bid for Warrnambool to make it financially superior to Saputo (see WCB: All the way to $8.50?).

By no means, says the cooperative’s advisors, should it be written off by Saputo which itself has to gain approval from the Foreign Investment Review Board for its Warrnambool takeover. 

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