UPDATE 1-Australian dairy takeover battle stirred anew with sweetened bid

Wed Nov 27, 2013 9:01pm EST

* Murray Goulburn lifts offer for Warrnambool to A$9.50

* New bid trumps Saputo but analysts say not a knockout blow

* Warrnambool shares rise 1.6 percent to A$9.40.

* Bidders appeal to farmer supplier shareholders (Updates with analyst comment, details on new offer)

By Jane Wardell

SYDNEY, Nov 28 (Reuters) - Murray Goulburn Co-operative Co Ltd piled pressure on Canada's Saputo Inc in the race for control of key Australian dairy exports with a fresh A$530 million ($480 million) cash offer on Thursday for Warrnambool Cheese and Butter Factory Co.

The sweetened A$9.50 bid is unlikely to deliver a knockout blow but will put pressure on Saputo's unconditional A$9 offer, which currently has the backing of the Warrnambool board, analysts said.

At stake is control of a major exporter of both traditional dairy products and high-tech milk extracts in demand in Asia.

Both Murray Goulburn and Saputo - the more aggressive bidders in a three-way battle - are holding public meetings in rural Victoria this week, pitching their bids to farmer suppliers who hold between 30 and 40 percent of Australia's oldest dairy firm.

Saputo's offer rises to A$9.20, valuing the company at A$515 million, if more than 50 percent of shareholders accept. Murray Goulburn's offer is also dependent on more than 50 percent acceptances.

"This is good news and it could simply mean that Saputo ups its bid to $9.50 to make the decision for shareholders easier," said Shannon Rivkin, director at Rivkin Securities.

"The WCB board may simply reject the new Murray Goulburn offer, but it would be far easier for the board to reject if it could get Saputo to commit to the extra 30 cents, which I think is a strong chance."

Saputo declined to comment. Warrnambool did not immediately respond to a request for comment.

Murray Goulburn, which owns 18 percent of Warrnambool, is racing against the clock in the bidding war, as it still needs regulatory approval before its bid can become unconditional.

Seeking to appeal to farmer suppliers, Murray Goulburn is touting the creation of a national dairy champion and promising to deliver benefits back to farm gate milk prices.

"A combined Murray Goulburn and Warrnambool will create one of the largest Australian-owned food and beverage businesses and a globally competitive dairy foods company 100 percent controlled by dairy farmers," Murray Goulburn Managing Director Gary Helou said in a statement.

Helou said on Thursday that Murray Goulburn has identified strategic capital investments to lift farm gate prices by A$1 per kilogram of milk solids over a five-year period from full-year 2012.

"This ... highlights Murray Goulburn's commitment as a cooperative to maximise returns for supplier shareholders," he said.

The latest offer - the ninth in three months - is a premium to Warrnambool's current share price, which rose 1.6 percent to A$9.40. The stock has more than doubled since Bega Cheese Ltd kicked off the bidding war in August.

Bega also holds around 18 percent of Warrnambool while Kirin Holdings Co Ltd's Lion last month took a 10 percent stake to protect its joint venture interests with the cheesemaker.

AGAINST THE CLOCK

Both Saputo's bid and Bega's trailing final offer of A$2 cash and 1.5 Bega shares, currently valued at around A$9 per share, close in mid-December.

Murray Goulburn has been unable to make its offer unconditional because it requires either approval from the Australian Competition and Consumer Commission (ACCC) or the Australian Competition Tribunal, a process that is expected to take several months.

The cooperative has decided to bypass the ACCC, which looks purely at competition issues and has previously expressed concern about Murray Goulburn's interest in Warrnambool, to seek approval from the tribunal, which judges a deal on net public interest grounds.

Helou has complained the lengthy process creates an unfair playing field favouring foreign takeover competitors, noting the Foreign Investment Review Board was quick to approve Saputo's bid.

In an attempt to buy some time, Murray Goulburn on Wednesday asked the Australian Takeovers Panel to force Saputo to drop its latest revised offer, arguing that a decision to drop proposed dividends lowers the overall value of the bid for some shareholders.

The panel said it had not decided whether to conduct an inquiry and made no comment on the merits of the application. ($1 = 1.1007 Australian dollars) (Editing by Edwina Gibbs)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.