AUS: Takeover watchdog set to rule on Saputo's WCB bid

By Dean Best | 12 December 2013

Australia's Takeovers Panel is reportedly set to announce whether Canadian dairy giant Saputo must up its offer for local processor Warrnambool Cheese and Butter Factory.

According to a report on the website of The Australian newspaper, the Panel is expected to issue its ruling tomorrow (13 December). The Panel could order Saputo to lift its bid from A$9.20 to A$9.56 a share, the report said.

The Panel has been mulling an application against the Saputo offer from rival bidder, Australian dairy co-op Murray Goulburn, made last month.

Murray Goulburn has challenged Saputo's latest bid for WCB on the grounds the Canadian company "misinformed" investors in the takeover target.

On 25 November, Saputo tabled its latest offer for WCB. It said it would up its bid from A$9 to A$9.20 a share - if it secured over 50% of WCB.

However, Murray Goulburn, which at that point had also made a bid of A$9 a share, challenged Saputo's offer, pointing to the withdrawal of its rival's plans to offer WCB shareholders special dividends.

Saputo's A$9.20-a-share bid no longer includes WCB's plans to pay special dividends to its shareholders, a proposal set out earlier this month. WCB, which has backed Saputo throughout the takeover battle, had planned to pay out the dividends if the Canadian company reached certain thresholds of ownership. The dividends would be deducted from the A$9 a share offer. WCB said it no longer intended to pay the dividends.

Murray Goulburn argued the withdrawal of the dividends meant WCB shares traded between 15 and 25 November "on the basis of misinformation as to the terms of the Saputo bid, namely that Warrnambool shareholders would contingently receive franking credits of up to A$0.56 per share".

Last week, the Panel placed "interim orders" on Saputo's bid for WCB. The orders mean Saputo must stop processing any acceptances for its lastest bid for WCB, which faced criticism from Murray Goulburn. The move, which could last for up to two months, gives the Panel more time to consider the offer, it said.

Murray Goulburn has since tabled an offer worth A$9.50 a share. Its offer remains subject to approval from Australia's competition authorities, with a hearing possibly set for February.

Saputo, which has received backing from regulators, has said the requirement makes Murray Goulburn's bid "uncertain". WCB's board, which has so far supported Saputo, has made similar public misgivings.

Bega Cheese, another Australian dairy, has also tabled offers for WCB. Its latest, "final" bid, made last month, was a mix of cash and shares, valuing WCB at A$8.871 a share.

Murray Goulburn and Bega Cheese are investors in WCB, both owning around 18% of the business. Kirin Holdings, the Japanese food and drinks giant, owns another 9.99% of WCB.

Sectors: Dairy, Mergers & acquisitions

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

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