Saputo bids to acquire Australia’s Warrnambool Cheese and Butter

Saputo, a Canadian dairy processor, has announced a $370m all-cash bid to take over Australian dairy processor Warrnambool Cheese and Butter (WCB), beating a significantly lower bid from the latter’s majority shareholder Bega Cheese in September.

Warrnambool is one of the leading milk processors in Australia, with two manufacturing facilities in South West Victoria and South Australia. It employs more than 420 people.

The company produces a range of dairy products including cheese, butter and butter blends, milk, cream and dairy ingredients, for domestic and export markets.

For the year ending 30 June 2013, Warrnambool posted consolidated revenues of C$477m with EBITDA of C$25m and expects EBITDA to be up to C$50m in 2014.

The investment is part of Saputo’s strategy to make Australia the platform from which to expand its presence in untapped emerging markets in the Asia Pacific region.

As per the terms of the deal, the Canadian firm has agreed to pay A$7 per share, which the Warrnambool board has recommended that shareholders accept in the absence of a higher bid.

The company plans to finance the transaction through a newly committed bank loan with a three-year term.

Reuters quoted Warrnambool CEO David Lord as saying in a media briefing: "The board came to the view after careful consideration that the Saputo offer is far superior to the Bega bid in terms of both value and conditionality."

"It provides greater certainty and substantial premium to WCB shareholders," Lord added.

Saputo CEO Lino A Saputo Jr. said, "We believe Australia has the ideal platform for us getting products into those emerging markets."

Subject to certain conditions, including foreign investment approval, the offer is expected to be completed by early December this year.

Rothschild and Rabobank are providing financial advisory services to Saputo, while Maddocks and Stikeman Elliott are acting as legal advisors.

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Image: The investment is part of Saputo’s strategy to make Australia the platform from which to expand its presence in the Asia Pacific region. Photo courtesy of Stephanie Berghaeuser.