Warrnambool Cheese and Butter (WCB) has urged its shareholders to reject a takeover proposal from rival Bega Cheese (BGA), saying the offer is inferior to one put forward by Canadian dairy giant Saputo.
Bega last week said it intended to put its takeover offer to WCB shareholders, despite saying it would not lift its offer to match that put forward by Saputo.
It said it believed some WCB shareholders would prefer the company remain in Australian hands.
But the WCB board on Wednesday urged its shareholders to reject the deal and ignore all documentation sent to them by Bega.
They pointed out that a recent independent audit found Bega's offer was neither "fair nor reasonable" to WCB shareholders.
"The Saputo offer announced to ASX on 8 October 2013 is superior to Bega's offer," chairman Terry Richardson said in a letter to shareholders.
Saputo has put forward a $7 a share takeover offer that values WCB at around $390 million.
Bega's proposal, which has previously been rejected by the board, would see WCB shareholders receive 1.2 Bega shares plus $2 cash, with would value WCB at just over $360 million.
Bega is part of the Uncapped 100.