AUS: Murray Goulburn to accept Saputo's WCB bid

By Dean Best | 23 January 2014

Murray Goulburn indicated bidding process favoured Saputo

Murray Goulburn indicated bidding process favoured Saputo

Murray Goulburn has decided to accept the takeover offer for fellow Australian dairy firm Warrnambool Cheese and Butter Factory from Saputo.

Twenty-four hours after Saputo announced it had secured a controlling stake in WCB, rival suitor - and WCB shareholder - Murray Goulburn said today (23 January) it will move to withdraw its offer and accept the Canadian dairy giant's bid.

The decision from Murray Goulburn, which owns 17.7% of WCB, will take Saputo's stake in the company to above 75%. Crossing that threshold will see Saputo's offer increase to A$9.40 a share. If Saputo secures 90% of WCB, its bid will rise to A$9.60 a share. Murray Goulburn said it would receive "at least" A$92.9m of cash proceeds from the sale of its stake.

However, Murray Goulburn said it was "disappointed" not to have been able to buy WCB - and criticised the bidding process for the business. Australian competition regulators cleared Saputo's move to buy WCB in November, just a month after it entered the race. Murray Goulburn's rival offer had yet to be passed by regulators, which were set to start to look into the bid next month.

"MG considers it a lost opportunity for the Australian dairy industry that Saputo received Foreign Investment Review Board (FIRB) approval in a significantly shorter timeframe than the process MG was required to follow," the company said. 

"From the point that Saputo was granted FIRB approval, the MG offer was not capable of being acted on by WCB shareholders in the same time period. Consequently, MG was not able to compete realistically on a level playing field with a competing international bidder for WCB."

MD Gary Helou said Murray Goulburn was "pleased" it played a part in what became "a genuine auction" for WCB and said the sale of its stake "represents an excellent financial outcome for our co-operative".

Murray Goulburn would now look to grow at home and abroad, Helou insisted.

"We have a vision to create a significant Australian owned globally-relevant dairy business. There is a significant opportunity for us to capture the global opportunity and deliver its upside to Australian farmers and their rural communities – ultimately the only way the industry will be able to arrest the decline in production we have experienced over the last ten years."

Meanwhile, it appears Saputo may been unable to secure 100% of WCB. Japanese food and drinks group Kirin Holdings snapped up 9.99% of WCB just weeks after the race to buy the business started in September.

The move from Kirin, which made the acquisition through Australian dairy arm Lion, was seen as a way of protecting its business interests. WCB produces cheese sold under brands owned by Lion.

In a statement today, Lion said it had "no current intention" of selling its stake in WCB to Saputo.

"Lion acquired its shareholding in Warrnambool Cheese and Butter to further strengthen the close relationship it has enjoyed with WCB over many years," it said. "Lion's rationale for acquiring its shareholding in WCB has not changed. Lion looks forward to continuing to strengthen its relationship with WCB."

Sectors: Commodities & ingredients, Dairy, Mergers & acquisitions

Companies: Saputo, Murray Goulburn, Warrnambool Cheese and Butter Factory, Kirin Holdings

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