Investors are expecting the fight for Warrnambool Cheese & Butter to escalate to the dizzy heights of $9.50 or even $10 a share.
Trading in the 125-year-old company was halted on Friday after its board announced it was negotiating with Canada's biggest dairy processor, Saputo, about increasing its offer.
It came after Murray Goulburn tried to trump Saputo's bid on Wednesday, firing in a $9 cash per share offer, valuing the Victorian dairy group at $505 million.
Saputo may make its offer unconditional, removing its main stumbling block of securing at least 50.1 per cent of WCB.
WCB secretary Paul Moloney said he expected an announcement from Saputo by Monday. The shares were trading at $9.10 before the trading halt.
Mark Topy, an analyst at Canaccord Genuity, said Saputo had the greatest financial power and could offer at least $9.50 a share.
"The fact that [WCB] have gone into a trading halt ... looks like they are going to really try and knock Murray Goulburn out of the game," Mr Topy said.
But Rivkin Securities director Shannon Rivkin said he was expecting a more modest offer.
"They are probably going to come in with a bid very close to the last bid. My guess is $9 or close to it," Mr Rivkin said. "On expected earnings, it is at a sky high price now."
WCB's profit slid 51 per cent to $7.5 million in the year to June 30. It is being stalked by food companies because of its large export focus and potential to capitalise on the Asian agricultural boom.
Macquarie Bank has forecast Chinese dairy consumption to rise 13 per cent a year until 2017, while its appetite for high-end milk products will swell by 20 per cent annually.
"The point is that this is a strategic asset for Saputo," Mr Rivkin said. "They have no presence in Australia or this region at all and they want that, so overpaying doesn't really matter for them considering how big they are. For Bega and Murray Goulburn it's about staying relevant."
Bega, which is offering $2 cash plus stock, increased the scrip component of its offer from 1.2 to 1.5 Bega shares on Thursday, valuing its bid at $9.13 a share based on Friday's close. The NSW-based company has approval from the competition regulator, unlike Murray Goulburn, which will lodge a formal submission to the competition tribunal at the end of the month, with a decision taking up to three months.
Mr Rivkin expected Bega to become a takeover target if its bid is unsuccessful, while Murray Goulburn could become "a small fish in a big pond" if its bid fails.
"If they have Saputo come in, who would be the biggest player all of a sudden, they are just going to remain very vulnerable," he said.
Federal Treasurer Joe Hockey gave Saputo foreign investment approval on Tuesday, saying that "Australia is open for business".
About 45 per cent of the company is owned by Bega (18.3 per cent), Murray Goulburn and Japanese beer and dairy company Kirin (10 per cent). Some investors expected that in an effort to remove uncertainty, Saputo would remove its minimum acceptance condition.