WCB maintains Saputo support

Chair Terence Richardson still backs Canadian takeover offer.

Warrnambool Cheese and Butter Factory’s (WCB) board of directors are still backing Canadian dairy giant Saputo Inc’s planned takeover offer of the Victorian dairy company.

At its annual general meeting today, Warrnambool chairman Terence Richardson described Murray Goulburn Co-operative Ltd’s $7.50 a share offer to Warrnambool shareholders, 50 cents above Saputo’s offer, as “subject to a competition condition which is currently uncertain and will take several months to be determined”.

Saputo’s $7 offer, says Richardson, is within KPMG Corporate Finance’s valuation of Warrnambool of between $6.96 and $7.49 a share.

Moreover, says the Warrnambool chairman, “Saputo has clearly expressed its intention to increase existing capacity or build new capacity… introduce new product lines… pay a leading competitive milk price… and retain our existing farmer supplier process and structures”.

Richardson rejects Bega’s (BGA) offer because of questions about the value of Bega’s stock, the prospect of job losses at Warrnambool and a regional milk pricing system.

Bega is offering 1.2 of its share plus $2 cash for Warrnambool. At 1242 AEST Bega’s offer was valued at $6.74.

Warrnambool shares were at $8.11, an 8.1% premium over Murray Goulburn’s offer and a 16% over Saputo’s cash offer, not taking into account the special dividend offered by Saputo with franking credits that adds as much as 56 cents to its bid.

Bega and Murray Goulburn together have a 35% stake in Warrnambool and may prove an obstacle to Saputo’s efforts to get a 50.1% stake in Warrnambool (see David Gilmour's WCB: All the way to $8.50?).

Still, Richardson did say in reference to the three takeover offers for Warrnambool, “it will be you our shareholders who will have to decide”.

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