AUS: Saputo ups WCB bid after takeover watchdog intervenes

By Dean Best | 17 December 2013

Saputo has upped bid again - this time after discussions with Australias Takeovers Panel

Saputo has upped bid again - this time after discussions with Australia's Takeovers Panel

Saputo has increased its bid for Warrnambool Cheese and Butter Factory after an intervention from Australia's Takeovers Panel.

The Canadian dairy group today (17 December) revised its offer after the takeover watchdog accepted a complaint from rival bidder Murray Goulburn, the Australian dairy processor.

Saputo, which had said it would offer A$9.20 a share to WCB investors if it received the backing of over half the company's shareholders, is now offering A$9.40 a share if it wins the support of 75% of stockholders. It will up the bid to A$9.60 a share if it over 90% of investors back the bid.

Murray Goulburn has argued Saputo's offer of A$9.20 a share misinformed investors in WCB. Saputo's earlier offer of A$9 a share had included special dividends worth up to A$0.56 a share that WCB planned to pay its shareholders if the Canadian bid was successful.

The credits were removed when Saputo tabled its A$9.20 bid, trumping Murray Goulburn's then offer of A$9 a share. However, the revised offer prompted Murray Goulburn to complain to the Takeovers Panel. Murray Goulburn said the decision to pull the special dividends meant Saputo's A$9.20-a-share offer was a "reduction" from its previous bid.

The watchdog said it was "strongly of the view unacceptable circumstances had occurred" when the special dividends and associated franking credits were withdrawn.

"The announcements put into place arrangements that were complex, created uncertainty and were most undesirable. The Panel would not want to see similar arrangements in future," it said.

"The Panel was minded to make a declaration of unacceptable circumstances. Notwithstanding this, the Panel has accepted undertakings from Saputo and Warrnambool and declined to make a declaration of unacceptable circumstances.

Saputo's new bid will be open until 10 January. It claimed it would not increase the offer again during that period.

Around 17% of WCB shareholders have so far voted in favour of a Saputo takeover.

However, Murray Goulburn owns around 18% of WCB. A third bidder, Bega Cheese, also has an 18% stake. Japanese food and drink group Kirin Holdings holds a 9.99% stake.

Murray Goulburn has an offer on the table for WCB worth A$9.50 a share. However, the bid is dependent on approval from Australian competition officials. The Australian Competition Tribunal is scheduled to rule on the offer in February.

Bega Cheese's bid has been made in cash and shares. It values WCB at A$8.54 a share.

Sectors: Commodities & ingredients, Dairy, Mergers & acquisitions

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

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