New Zealand's Fonterra acquires 6% in Australia' s Warrnambool

The battle for control of Australia' s Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB) has become more complex after New Zealand's Fonterra Co-operative yesterday acquired a near 6-per cent stake in Bega Cheese – one of the three bidders for WCB.

The move from the world's largest dairy exporter came two days after Japanese brewer Kirin Holdings Co Ltd, through  its Lion subsidiary, acquired  9.99-per cent stake in WCB.

Lion owns iconic cheese brands such as Coon, King Island Dairy, Cracker Barrel, Tasmanian Heritage, Mersey Valley and South Cape, most of which are produced by WCB, and packaged and sold by Lion.

Fonterra's move also came just a few hours after the Australian antitrust regulator gave Bega Cheese  the go-ahead to pursue its proposed acquisition of WCB.

Fonterra, which licenses the Bega brand and has a cheese supply contract with Bega Cheese, has purchased 9.3 million shares at $A4.95 each (amounting to $46 million) representing a 12-per cent premium to Bega's  closing price of $4.41 yesterday.

Fonterra is actually seeking a higher stake, but Bega Cheese has a 10-per cent cap on ownership of its shares.

Bega Cheese, which holds a  17.9-per cent stake in WCB, has offered to buy WCB - one of the largest milk processors in Australia - for $2 plus 1.2 of its own shares for each of WCB share, amounting to a total of A$7.29 per share.

On the other hand, Murray Goulburn  Co-operative, Australia's biggest milk processor, which  holds 17 per cent in WCB, has offered A$7.50 per share.

Saputo Inc, Canada's largest dairy producer, this week raised its bid by 14 per cent to A$8-per share or A$449 million ($430 million) for WCB.

WCB board has backed Saputo's revised bid of $8 per share, pending a better offer, but Bega Cheese is expected to convene a board meeting early next week to consider hiking its offer.

WCB has said that Saputo remains best placed to accelerate 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 aimed at expanding  to meet the growing demand for dairy products in the Asia Pacific region.

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.