SYDNEY Saputo Inc (SAP.TO), Canada's largest dairy producer, will acquire Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB.AX) in a deal valuing Australia's oldest dairy processor at A$392.7 million ($370.10 million).
Saputo, which operates in Canada, the United States and Argentina, has been looking at Australia as a platform to expand its global presence and tap growing demand in Asia's emerging markets. Warrnambool, whose brands include the Sungold Milk range of fresh milk, supplies dairy products to both domestic and international customers.
Saputo made an off-market offer of A$7.00 per share for Warrnambool in an all-cash deal, which the Warrnambool board had recommended shareholders to accept. That was well above a A$5.75 per share offer from majority owner Bega Cheese Ltd (BGA.AX) in September.
"The board came to the view after careful consideration that the Saputo offer is far superior to the Bega bid in terms of both value and conditionality," Warrnambool CEO David Lord told reporters in a media briefing on Tuesday. "It provides greater certainty and substantial premium to WCB shareholders."
The offer represents a 57.0 percent premium to the one-month volume-weighted average price of Warrnambool shares before Bega's offer was announced, the company said.
Warrnambool shares surged 11.8 percent to A$7.22 by 0200 GMT, touching an all-time high of A$7.29, after the takeover was announced.
"This is our dream of ultimately having an Australian platform," Saputo CEO Lino A. Saputo, Jr. said in a media briefing. "We believe Australia has the ideal platform for us getting products into those emerging markets."
The Canadian company currently has a sales office in China, and is selling dairy products into other Asian markets such as Japan, Taiwan and South Korea, out of its Argentina operations.
When asked if the company would look to make more acquisitions in Australia, Saputo said the appetite is there.
"We have an appetite to grow and most of that growth will come through acquisitions. And of course if there are other assets available for sale, we will be part of that process," Saputo said.
"Our balance sheet is very clean, which provides us quite a bit of flexibility for other acquisitions," he added. ($1 = 1.0611 Australian dollars)
(Reporting By Maggie Lu Yueyang; Editing by Ryan Woo)