January 23, 2014

 

Saputo acquires majority stake in Warrnambool dairy company
 

 

 

Canada's largest milk processor, Saputo Inc, has won control of Warrnambool Cheese & Butter Factory Co, after securing more than half of the shares in Australia's oldest dairy producer in a three-way tussle.

 

Montreal-based Saputo holds 52.7% of Warrnambool, the company said in a statement. The deadline for the offer which values Warrnambool at a maximum of AUD537 million (US$475 million) was extended by two weeks. Initially scheduled to close by January 22, the offer period was scheduled to close on February 4.

 

Warrnambool has more than doubled in market value since an initial bid from Bega Cheese Ltd in September began a contest for the company, with Saputo and Melbourne-based Murray Goulburn Cooperative Co joining in.

 

Warrnambool produces a range of dairy products for domestic and export markets. Its products include cheese, butter and butter blends, milk, cream and dairy ingredients. Warrnambool draws milk from some of the most productive dairy regions in Australia, including southwest Victoria, the southeastern region of South Australia and the Fleurieu Peninsula. The public listed company on the Australian Securities Exchange operates two manufacturing sites.

 

Buying Warrnambool gives Saputo export infrastructure and production capacity to meet rising demand for dairy in Asia. Milk consumption will jump by 27% between 2012 and 2020, at 14 billion litres in Southeast Asia's six-largest economies, agricultural researcher, Rabobank, said in a July report.

 

Saputo will pay a maximum of AUD9.60 (US$8.45) per share in cash should it gain more than 90% of Warrnambool, the company said in a statement on December 17. After securing more than 50% of Warrnambool, Saputo will pay AUD9.20 (US$8.10) a share, which will rise to AUD9.40 (US$8.27) should it obtain more than 75%, it added.

 

Bega, which withdrew its offer last month, said that it had agreed to sell its 18.8% stake to Saputo. Murray Goulburn is the producer's second-largest shareholder, with a 17.66% stake and Kirin the third biggest, with a 10% stake, according to data compiled by Bloomberg.

 

Murray Goulburn has offered AUD9.50 (US$8.36) per share in a bid which requires approval from the Australian Competition Tribunal.

 

"Given Saputo's offer period is automatically extended for a further 14 days, Murray Goulburn will now commercially assess this development," said the company.

 

Saputo produces, markets, and distributes cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. It is one of the top 10 dairy processors in the world, with products sold in more than 40 countries.