Warrnambool says Saputo can win control without key stakes

Warrnambool Cheese and Butter Factory Ltd chief executive David Lord says Saputo Inc could win a majority stake in his company, even without the dairy producer’s key shareholders Bega Cheese Ltd and Kirin Holdings Inc selling their stakes to the Canadian company.

“Yes, I think they (Saputo) can” get control of Warrnambool without Bega and Kirin selling to them, Lord told DataRoom.

Saputo’s Warrnambool stake was 16.9 per cent before a Takeovers Panel order earlier this month forced the Montreal-based company to give Warrnambool shareholders a chance to reject the offer by January 3.

Bega has a 18.7 per cent Warrnambool stake and Kirin a 9.99 per cent shareholding. Saputo’s $9 a share Warrnambool takeover offer closes January 10.

Lord, whose board backs Saputo’s takeover, said he did not know whether the Canadian company would extend its $9 a share offer past January 10.

Bega and Kirin both risk a minority position in a Saputo controlled company if they don’t accept the Saputo offer. Moreover, the value of their Warrnambool stakes may plunge if Saputo gets control of the company.

Warrnambool shares have surged 105 per cent to $9.25 since Bega launched its takeover bid on September 12.

Saputo’s bankers may be having success in enticing Bega to sell its Warrnambool stake to Saputo after Bega ended its own takeover offer for Warrnambool on Friday. Kirin has yet to decide on what it may do with its Warrnambool stake.

Saputo’s Warrnambool takeover offer increases to $9.20 a share once Saputo gets more than 50 per cent of the company. It rises to $9.40 a share if Saputo gets more than a 75 per cent Warrnambool shareholding and $9.60 per share if it secures a shareholding greater than 90 per cent.

Lord says the confusion of surrounding Saputo’s offer and the subsequent Takeovers Panel order has resulted in an “improved offer” from Saputo for Warrnambool that is now “uncomplicated”.

“For shareholders, everything is very clear,” says Lord.