Warrnambool Cheese and Butter board backs revised takeover bid from Saputo

Australian dairy processor Warrnambool Cheese and Butter (WCB) has announced that its board of directors has advised its shareholders to accept a revised takeover offer made by Saputo, a Canadian dairy firm, in the absence of a superior proposal.

Warrnambool is one of the leading milk processors in Australia, producing a range of dairy products, including cheese, butter and butter blends and dairy ingredients, for domestic and export markets.

For the year ending 30 June 2013, the company posted consolidated revenues of C$477m with EBITDA of C$25m.

The latest offer from Saputo is a revised, unconditional and all cash offer of A$9 a share or A$505m for all of the WCB shares.

Bega Cheese made a revised part scrip and part cash offer of around A$8.675 on 14 November, based on the closing price of the same day.

On 13 November, MG increased its initial offer of A$7.5 cash a share or A$420m to A$9 a share or A$505m. However, the offer remains highly conditional; in particular it is subject to no objection by the ACCC or to granting of authorisation by the Australian Competition Tribunal.

WCB chairman Terry Richardson said that after careful consideration of the three proposals, the board has decided to unanimously recommend the revised Saputo offer, in the absence of a superior proposal.

"The board’s recommendation reflects the increased cash consideration offered by Saputo and the compelling timing and execution certainty that it provides particularly compared to the highly conditional Murray Goulburn Proposal."

"The revised Saputo offer is also superior and more certain than the final Bega part scrip, part cash offer due to the inherent risks for WCB shareholders in accepting Bega shares," Richardson added.

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Image: Saputo is bidding for a major stake in Warrnambool, one of the leading producers of dairy products in Australia. Photo courtesy of Stephanie Berghaeuser.