Canadian dairy giant Saputo has increased its takeover bid for Warrnambool Cheese and Butter Factory Company Ltd (WCB), in a move that has won the endorsement of the Victorian dairy processor's board.
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.
The Warrnambool board said, in the absence of a superior bid, it unanimously recommended the revised offer from Saputo.
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.
Eureka Report had flagged the strong likelihood Saputo would increase its offer in WCB: All the way to $8.50?
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.
The board specifically said it preferred the revised Saputo bid over the Murray Goulburn which valued WCB at $7.50 for each of its 56 million shares, and the company at $430 million.
At its annual general meeting yesterday, the WCB board said it was still evaluating the Murray Goulburn bid.
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 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.