Warrnambool still eludes Saputo

Has Foreign Investment Review Board approval for Saputo Inc’s takeover offer for Warrnambool Cheese & Butter Factory Holdings Ltd helped the Canadian diary giant succeed in its pursuit of the Victorian milk buyer and cheese producer?

In a word, no.

Saputo’s offer is conditional on 50.1 per cent of Warrnambool shareholders accepting its offer.

That still remains unlikely.

Saputo rivals for Warrnambool, Bega Cheese Ltd and Murray Goulburn Co-operative Ltd, with Kirin Holdings Inc, control 46 per cent of Warrnambool’s shares.

The three may not be speaking to each other but they are seemingly implacable in their opposition to Saputo acquiring Warrnambool.

Kirin, through its unit Lion, has a 9.99 per cent stake in Warrnambool. It does not want Saputo challenging it in Asia by using Warrnambool as a platform to aggressively expand in the region.

Murray Goulburn and Bega have s waged a campaign to takeover Warrnambool and  seem in no mood to capitulate to Saputo even if they may be tempted, just a little, to cash in on Warrnambool’s $8 a share offer.

Mind you Bega and Murray Goulburn could get more for their shares by selling them in the open market. Warrnambool’s stock today closed at $8.52.

Murray Goulburn, which has bid $7.50 cash for Warrnambool, will seek to drag out its acquisition fight as the dairy cooperative seeks to get Australian Competition Tribunal approval.

But Murray Goulburn seems stymied as regulators seem to want three buyers of milk in western Victoria and parts of South Australian rather than two. Murray Goulburn, Warrnambool and the world’s biggest dairy cooperative Fonterra, which has a 6 per cent Bega stake, are the three major milk buyers in the region.

Bega which has offered 1.2 of its shares plus $2 cash may have to improve its offer. At the close of trading today Bega's offer was valued at $7.24.

Saputo, Murray Goulburn and Bega are all no closer in their objective as they are all not prepared to strike a deal with each other. The Warrnambool takeover battle has progressed very little indeed.