Warrnambool gets third suitor

The bidding war for Warrnambool Cheese & Butter Factory Company (WCB) intensified today with major shareholder Murray Goulburn Co-operative Company lobbing a $7.50 cash bid for the dairy company. But the market is expecting more.

The bidding war for Warrnambool Cheese & Butter Factory Company (WCB) intensified today with major shareholder Murray Goulburn Co-operative Company lobbing a $7.50 cash bid for the dairy company.

The market is anticipating a better offer to come with Warrnambool Cheese’s share price surging 6.3% to a record high of $7.89 this morning as investors await the response from the target’s first two bidders, Bega Cheese and Canadian diary giant Saputo.

Murray Goulburn, which is being advised by Lazard, is hoping to win over dairy farmers who are shareholders of the target by stating that the merger would create one of the largest Australian-owned food companies that would be fully controlled by dairy farmers.

The merged entity is forecast to turnover in excess of $3.2 billion in annual sales with a combined production of over four billion litres of milk in 2013-14.

The corporate interest in Warrnambool Cheese has been highlighted by Tom Elliot just ahead of the first bid for Warrnambool Cheese by Bega Cheese (BGA).

Bega’s offer of $2 cash and 1.2 Bega shares (implying a bid of around $6.64) was trumped by Saputo four weeks later with a $7 all cash bid.

Bega, which is part of the Uncapped 100, is Warrnambool Cheese’s largest shareholder at around 18%, but Murray Goulburn is a close second with a holding of around 17%.