Murray Goulburn will struggle to gain the support of Warrnambool Cheese & Butter's board even if it raises its takeover offer for the company.
WCB's board has unanimously recommended shareholders accept Canadian dairy dynamo Saputo's bid of $9 cash a share or $505 million. The revised Saputo offer, made late on Friday, matched a fresh bid from Murray Goulburn lobbed two days earlier.
But Saputo won the board's endorsement after it said it intended to make its offer unconditional, unlike Murray Goulburn, which needs approval from the competition regulator that could take up to six months.
Investors are anticipating another bid, with WCB's shares rising 2 per cent to $9.29 on Monday.
WCB chief executive David Lord said Murray Goulburn's completion risk had weighed heavily on the board's decision to back Saputo.
"Clearly, the board has an obligation to review all revised offers carefully," he said on Monday.
"But in Murray Goulburn's case, while that competition regulator condition exists, that represents significant risk for WCB shareholders in selling into the offer. At the end of a three-month period, a six-month period, however long the competition tribunal takes to make its decision, if it doesn't wave it through, then shareholders are left with the Murray Goulburn offer having evaporated on them. And if the other players have already gone away, then they can be left stranded."
WCB is at the centre of a three-way bidding war, with NSW-based Bega Cheese as the other suitor.
Murray Goulburn managing director Gary Helou said on Sunday the co-operative reserved its right to review its bid.
Mr Lord said Saputo's offer gave certainty to WCB's shareholders and its 500 workers.
Bega and Murray Goulburn have both said that if they were successful there would be considerable synergies, which Mr Lord said could mean job losses.
"If there are employee positions that are duplicated when you put two businesses together, then you can realise synergy by removing those positions," he said. "More and more as time passes, what's dawning on people is the importance of employment in the region and the multiplier effect of a loss of employment in the region.
"I think that is gaining more support for the Saputo proposal because the Saputo offer does preserve the jobs of existing employees."
Saputo will keep WCB's brand and management, and said it had the "financial capacity to invest further in the company".
Bega believes it still has a fighting chance, announcing to the market it will hold meetings with WCB shareholders in Warrnambool, Mount Gambier and Ballarat this week.
Bega has announced an unconditional and final offer of $2 cash plus 1.5 Bega shares, valuing its bid at $9.17 based on Monday's close.