Murray Goulburn bids for Australia’s Warrnambool Cheese and Butter

Murray Goulburn (MG), a dairy co-operative in Australia, has made a A$420m ($405m) all-cash bid to takeover Warrnambool Cheese and Butter (WCB), in a move to create a leading dairy food entity in the country.

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

The company owns two manufacturing facilities in South West Victoria and South Australia and employs more than 420 staff.

MG’s proposal comes after a $370m all-cash bid by Canadian dairy firm Saputo for WCB.

In September, WCB’s majority shareholder Bega Cheese made a takeover offer of A$5.78 per share, which is conditional upon approval from the Australian Competition and Consumer Commission.

MG has made an off-market takeover offer of A$7.5 per share of WCB, representing a 66% premium over the closing price of A$4.51 per WCB share on 11 September.

MG, which owns about 17% of WCB, plans to back the transaction through A$350m debt facilities secured from its existing financiers, including National Australia Bank (NAB), Australia and New Zealand Banking (ANZ) and Westpac Banking (WBC).

MG chairman Philip Tracy said, "This is a historic opportunity for Murray Goulburn and Warrnambool Cheese & Butter suppliers and shareholders to create a larger scale, globally competitive Australian dairy food company."

Should MG’s bid be successful, the combined entity will comprise more than 3,000 supplier shareholders supplying over four billion litres of milk each year.

The business will be positioned amongst the top 20 global dairy producers with annual revenues in excess of A$3.2bn and export sales of A$1.4bn to more than 60 countries.

As part of the transaction, MG seeks to rename the combined business ‘Murray Goulburn Warrnambool’ to represent a merger of two major Australian dairy firms.

Lazard is providing financial advisory services to MG, while Minter Ellison and CIMB Corporate Finance are advising WCB on the offer.

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Image: The takeover would result in a large, globally competitive Australian dairy company. Photo courtesy of Suat Eman.