Murray Goulburn has stepped up the takeover battle for Warrnambool Cheese and Butter, targeting the company’s farmer shareholders with a $420 million offer it says will help turn around Australia’s declining milk production.
The dairy cooperative behind the Devondale brand has launched a $7.50 per share bid to buy Warrnambool, trumping previous offers from Bega Cheese and Canadian dairy giant Saputo.
Murray Goulburn chief executive Gary Helou says the deal would create one of Australia’s biggest food companies, and a dairy business able to compete on a global scale.
“Our proposal is about combining two iconic Australian dairy companies to create a new Australian dairy powerhouse that can win at home and definitely win globally,” he said.
Australia’s milk production had declined in the past 15 years, despite growing demand from Asia, and the country could become a net importer of dairy products within the next decade and a half, Mr Helou said.
“I believe the step we are taking today will be the first major step towards arresting the decline of our industry and seizing the price that Asian markets are offering us,” he said.
“We strongly believe the combination of Murray Goulburn and Warrnambool is the only step forward to create success and growth for our great industry.”
Murray Goulburn is making a direct pitch at Warrnambool’s farmer shareholders, which it believes own between 30 and 40 per cent of the company.
Mr Helou plans to hit the road with Murray Goulburn chairman Phillip Tracy in the next fortnight to convince Warrnambool’s shareholding suppliers the offer is in their best interest.
Saputo has tabled a $7 per share offer, while Bega was the first to make a play with a proposal that would give Warrnambool shareholders $2 cash plus 1.2 Bega shares for every share they own.
Murray Goulburn currently owns more than 17 per cent of Warrnambool, around the same sized stake owned by Bega.
The latest takeover offer sent Warrnambool shares up 47 cents, or 6.3 per cent, to $7.89 on Friday, well above the $4.50 they were trading at before Bega fired the first salvo in September.
Warrnambool has advised its shareholders to take no action on the Murray Goulburn offer.
The latest proposal is subject to approval by regulators, which could prove problematic given the Australian Competition and Consumer Commission expressed opposition to Murray Goulburn’s previous attempt to take control of Warrnambool in 2010.
But Mr Helou said the company would seek formal merger authorisation through the Australian Competition Tribunal, which applies a net public interest test, rather than use the ACC’s less formal process which focuses only on competition.
