Saputo gains control over Australia’s oldest dairy processor

MONTREAL — Saputo has come out on top in a bidding war for Australia’s oldest dairy processor by gaining majority control of Warrnambool Cheese & Butter, the company confirmed Tuesday.

MONTREAL — Saputo has come out on top in a bidding war for Australia’s oldest dairy processor by gaining majority control of Warrnambool Cheese & Butter, the company confirmed Tuesday.

The Montreal-based company wrote in a filing with the Australian Stock Exchange that it has secured a stake of 52.7 per cent in the dairy ahead of the Wednesday deadline for its offer.

Saputo gained control when Wilson Asset Management, which owns 1.15 per cent of Warrnambool, and other shareholders, agreed to sell their stakes, the Business Spectator website and the Australian Broadcasting Corp reported.

Saputo spokeswoman Sandy Vassiadis said the company is “happy” to have secured a majority of Warrnambool’s shares.

The Canadian cheese giant has been eyeing Australia for a decade as it sought ways to extend its reach into the Asia-Pacific area and capitalize on growing global demand for dairy solids.

The demand for milk powder used in baby formula, for example, has grown by 25 per cent annually since 2010.

The deadline for its offer has now been extended by 14 days to give more Warrnambool shareholders time to accept Saputo’s offer, which could raise the price to as high as AU$9.60 from AU$9.20, if enough shareholders tender their shares.

Saputo’s (TSX:SAP) offer of AU$9 per Warrnambool share rose to AU$9.20 after securing more than half of its stock. The bid rises to AU$9.40 per share if it gets 75 per cent of Warrnambool and AU$9.60 if it gets 90 per cent.

Saputo will pay between AU$503.7 million (C$486.3 million) and AU$537.3 million (C$518.8 million), depending on the result.

Warrnambool’s shares closed Tuesday at AU$9.31 on the Australian Securities Exchange, suggesting investors expect Saputo to get a solid majority of WCB shares.

Montreal-based Saputo has been creeping towards the finish line after one-time rival Bega Cheese, Australia’s fifth-largest dairy processor, last week agreed to tender its 18.8 per cent stake in the dairy.

The last official count put Saputo at 47.85 per cent.

Analyst Irene Nattel of RBC Capital Markets said Saputo’s takeover of WCB now is “virtually assured” and positive for the Canadian cheese producer.

“The proposed acquisition is highly strategic and would provide SAP with an important platform to capitalize on global growth in emerging markets,” she wrote in a report.

One of the remaining questions is how large Saputo’s stake will be.

“The wild card in the process remains (rival bidder) Murray Goulburn,” Nattel said.

Murray Goulburn, the co-operative that runs Australia’s largest dairy processor, controls 17.7 per cent of Warrnambool and has bid US$9.50 contingent on winning competition tribunal support.

“Given the uncertainty of approval by the Australian Competition Tribunal, we would expect Murray Goulburn to tender to Saputo while simultaneously expressing its disappointment and pointing to the windfall profit it will realize on its stake,” Nattel said.

The competition tribunal said Monday that it would proceed with its inquiry into Murray Goulburn’s bid, set to begin Feb. 10, even if Saputo secured more than half of Warrnambool.

Kirin Holdings also owns about 10 per cent of Warrnambool through its Lion unit in Australia.

Warrnambool is seen as a potential toe hold in the Asia-Pacific region for Canada’s largest cheese and dairy company, which also has a major presence in the United States and operations in South America.

Australia is the world’s third-largest exporter of milk products after the European Union and New Zealand, with about 10 per cent of the global market share.

On the Toronto Stock Exchange, Saputo’s shares closed down one cent to C$52.54 in Tuesday trading.

Just Posted

Updated: Red Deer welcomes 2019 Canada Winter Games Team Alberta

About 250 Alberta athletes are participating in the Games

Syrian immigrants feel welcomed

Winter Social held at Festival Hall to promote multiculturalism

Small group rallies with pro-immigration message

Group wanted to counter misinformation on United Nations migration agreement

Trump says ‘things are going very well’ with North Korea

WASHINGTON — President Donald Trump said Saturday that “things are going very… Continue reading

NDP won’t stop until Trans Mountain is built, says minister

Deron Bilous speaks at Red Deer chamber luncheon

VIDEO: Students in MAGA hats mock Native American at Indigenous Peoples March

Diocese in Kentucky says it is investigating the matter, caught on video by onlookers

CONSUMER REPORT: What to buy each month in 2019 to save money

Resolve to buy all of the things you want and need, but pay less money for them

Anxiety in Alaska as endless aftershocks rattle residents

Seismologists expect the temblors to continue for months, although the frequency has lessened

Women’s March returns across the U.S. amid shutdown and controversy

The original march in 2017, the day after President Donald Trump’s inauguration, drew hundreds of thousands of people

Kriechmayr edges Swiss favourite Feuz to win WCup downhill

WENGEN, Switzerland — It takes a special run to beat Switzerland’s best… Continue reading

WestJet plane heading to Victoria slides off Edmonton runway, no injuries

EDMONTON — A WestJet plane has slid off an icy taxiway at… Continue reading

Sam Bennett scores twice, Flames beat Red Wings 6-4

Flames 6, Red Wings 4 CALGARY — Sam Bennett scored twice including… Continue reading

Rare ‘super blood wolf moon’ takes to the skies this Sunday

Celestial event happens only three times this century

Most Read