Canada's Saputo raises bid for Australian milk processor Warrnambool

Saputo Inc, Canada's largest dairy producer, raised its bid by 14 per cent to A$449 million  ($430 million for Australia's Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB), trumping separate bids from two of its largest shareholders.

Earlier this month Saputo had arrived at an agreement to acquire the Australian company for A$392.7 million, beating a lower bid from Warrnambool's majority shareholder Bega Cheese Ltd, which holds holds an 18-per cent stake.  (See: Canada's Saputo to buy Australian milk processor Warrnambool for $370 mn.)

Saputo's A$8-per share offer beats a A$7.50 per share offer from Murray Goulburn Cooperative Co and Bega Cheese's cash and stock offer of A$5.78 per share (See: Goulburn joins Warrnambool bidding war).

Murray Goulburn, Australia's biggest milk processor, holds 17 per cent of WCB.

But Saputo's A$8 per share offer is still below WCB's A$8.15 closing price yesterday.

WCB said in a statement that its directors have recommended the revised offer from Saputo.

WCB's managing director, David Lord said the company is yet to hear from the other two bidders.

"It's a compelling offer. It's a material increase from where it was, it's an almost 7 per cent premium to the Murray Goulburn offer of the previous week," he said.

WCB said that Saputo remains best placed to accelerate the growth in WCB's business and has the strategic intent and financial capacity to invest further in the company by increasing existing capacity or building additional capacity.

Saputo's strategy in acquiring WCB is to service the growing demand for dairy products in the Asia Pacific region.

Since Saputo does not have any existing operations in Australia, the acquisition will not reduce the choices available for farmer suppliers.

Listed on the Australian Stock Exchange, WCB is one of the largest milk processors in Australia, operating two manufacturing sites in South West Victoria and South Australia where it employs over 420 people.

It produces a range of dairy products for domestic and export markets. Its products include cheese, butter and butter blends, milk, cream and dairy ingredients.

For the financial years ended 30 June 2013 and 2012, WCB's consolidated revenues were CA$477 million and CA$479 million, respectively.

Saputo is one of the top 10 dairy processors in the world, the largest in Canada, the third-largest in Argentina and among the top three cheese producers in the US.

The Toronto Stock Exchange-listed company produces and distributes a wide array of dairy products, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients.

Saputo's products are sold in more than 40 countries under well-known brands such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Dragone, DuVillage 1860, Friendship, Frigo Cheese Heads, Great Midwest, King's Choice, Kingsey, La Paulina, Milk2Go, Neilson, Nutrilait, Ricrem, Salemville, Stella and Treasure Cave.

Saputo offer requires approval from Australia's Foreign Investment Review Board.