Canada’s Saputo now has a clear run as Warrnambool Cheese and Butter directors urge shareholders to accept the bid and Treasurer Joe Hockey approves the foreign investment.
Warrnambool Cheese directors like the bid because Saputo doesn’t have an Australian operation and that means the staff and management will be retained.
Local bids for Australia’s oldest dairy company would most likely involve some form of trimming as suitors seeks savings from synergies.
However, the last hurdle for Saputo is the farmers who sell their milk to Warrnambool. Owning around 40 per cent of shares, the farmers need to determine if they will be better off under Saputo or not.
Warrnambool directors say they believe the dairy farmers will support Saputo’s bid.
Saputo’s $8 per share cash is preferred by Warrnambool compared to script and cash offers from Bega Cheese and Murray Goulburn.
Directors says the Saputo offer is an 8 per cent premium to Bega’s offer based on Bega’s share price on November 11. And a 7 per cent premium on Battle Murray Goulburn’s $7.50 per share.
Saputo’s offer is for a holding greater than a 50 per cent, which can be achieved without buying up Bega, Murray Goulburn and Japan’s Kirin holdings.
Warrnambool Cheese says Saputo will retain current senior management, staff and Warrnambool’s brands including Great Ocean Road and Sungold.
And Saputo plans to invest, increase capacity and introduce new brands, establishing Warrnambool as Saputo’s main platform to service the Asia-Pacific region.