January 8, 2014

Canada-based Saputo's bid to acquire Warrnambool Butter & Cheese (WBC) was given a boost after Australia's competition regulator stated that rival Murray Goulburn's offer for Australia's oldest dairy processor could reduce competition in the raw milk market in the country.

The Australian Competition and Consumer Commission also questioned whether an acquisition by the country's largest dairy processor would positively impact volume or the value of dairy exports. The agency made similar comments when Murray Goulburn tried to acquire Warrnambool in 2010.

The commission is assisting the Australian Competition Tribunal, which is set to begin hearings on Murray Goulburn's bid on February 10.

Murray Goulburn's offer is conditional on receiving the tribunal's approval along with it obtaining more than half of Warrnambool's shares. It holds about 17.7%, about the same as Saputo.

Warrnambool's board formally rejected Murray Goulburn's AUD9.50 (US$8.50) per share bid, saying it is "highly conditional and uncertain." It described Saputo's unconditional offer, set to expire Friday (Jan 10) evening, as "superior" based on value, certainty and timing.

Saputo is currently offering AUD9 (US$8) per share if it doesn't get a majority of WCB's stock but it would pay more if it gets more than 50% of outstanding shares.