SYDNEY Australia's competition regulator said on Thursday it would not block a bid for Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB.AX) by domestic rival Bega Cheese Ltd (BGA.AX), enabling Bega to re-enter the international battle for the dairy company.
Bega kicked off the bidding war for WCB in September with a cash and share bid currently worth around A$7.27 per share, but it has since been trumped by fellow shareholder Murray Goulburn Co-operative Co Ltd and by bids from Canada's Saputo Inc (SAP.TO). Saputo's top bid of A$8 per share values WCB at A$449 million ($426 million).
Analysts had expressed concern that the Australian Competition and Consumer Commission could block or impose strict conditions on Bega buying WCB, given their combined strength in the Australian dairy market.
"The ACCC concluded that a merged Bega and Warrnambool Cheese and Butter would continue to be constrained by other dairy manufacturers that they compete more closely with in the acquisition of raw milk, including Murray Goulburn and Fonterra," ACCC Chairman Rod Sims said in a statement.
Japan's Kirin Holdings Co Ltd (2503.T) bought a 10 percent stake in WCB through its unit Lion this week, further complicating the takeover battle.
The international tussle over WCB highlights the strong demand for Australian dairy assets and their exposure to rapidly growing markets in Asia.
WCB shares traded down 0.7 percent at A$8.30 while Bega shares were flat at A$4.39 in early trade.
($1 = 1.0537 Australian dollars)
(Reporting by Lincoln Feast; Editing by Stephen Coates)