Murray urges patience on WCB

Rival suitor responds to Canadian dairy giant's proposal to increase takeover bid by $1 a share, WCB board backs Saputo's offer.

Murray Goulburn has urged Warrnambool Cheese and Butter Factory Company (WCB) to take its time in considering its future ownership, after its takeover bid was usurped by an increased offer from Canadian dairy giant Saputo.

In a statement to the Australian Securities Exchange, Warnnambool said Saputo had boosted its offer by $1 a share, taking its bid from $7 a share to $8 a share (see David Gilmour's WCB: All the way to $8.50?).This would value the company at $448.8 million on a fully diluted basis.

The Warrnambool board said, in the absence of a superior bid, it unanimously recommended the revised offer from Saputo.

The board specifically said it preferred the revised Saputo bid over the Murray Goulburn offer which valued WCB at $7.50 for each of its 56 million shares, and the company at $430 million.

In a subsequent statement, Murray Goulburn said it noted that Saputo’s offer continues to be subject to substantial conditionality.

"Murray Goulburn believes that resolution of the future ownership of WCB will be a long process and that WCB shareholders should not act prematurely in relation to giving up control of their shareholdings," the statement said.

"Murray Goulburn believes it to be reasonable and in the national interest that Saputo’s Foreign Investment Review Board (FIRB) application to acquire WCB is not resolved until the public benefits of MG’s proposed acquisition of WCB have been given full consideration - pursuant to MG’s application for authorisation to the Australian Competition Tribunal to acquire WCB."

The group said it remained committed to acquiring WCB and to satisfying all conditions associated with its offer as quickly as possible.

WCB board backs revised Saputo bid

Earlier, WCB said the revised Saputo offer gives it the discretion to pay two fully franked special dividends of up to $1.31 per share in aggregate, noting that any special dividends would be deducted from the offer price of $8.

Saputo noted as much, saying its offer allowed WCB to declare and pay fully franked special dividends of up to a maximum of $1.31 per Warrnambool share.

Warrnambool said if Saputo obtains an interest in at least 50.1% of WCB shares, WCB may pay an initial special dividend of up to $0.46 per share. 

If Saputo obtains an interest in at least 90% of WCB shares, WCB said it may pay a subsequent special dividend of $0.85 per share.

In a separate release, Saputo said its strategy in acquiring Warrnambool is to position Warrnambool as the centre of its operations in Australia and its main platform from which to service the demand for dairy products in the Asia Pacific region. 

"As one of the largest international dairy companies, Saputo believes that by working with Warrnambool's management team and investing in Warrnambool's operations, it can greatly assist Warrnambool’s future development and accelerate its growth, nationally as well as internationally," it said.

The Canadian group said its takeover offer represented greater certainty for shareholders because, unlike the Murray Goulburn and Bega (BGA) offers, it is not subject to approval from the Australian Competition and Consumer Commission.

The Saputo deal is subject to approval from the Foreign Investment Review Board, however.

Warrnambool last traded at $8.15.

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