Australia’s biggest dairy company Murray Goulburn has increased its takeover offer for Warrnambool Cheese and Butter to $9.50 a share, or $533 million.
Murray Goulburn is moving to trump Canadian outfit Saputo, which can start paying shareholders its unconditional offer of $9 cash a share after gaining the complete backing of WCB’s board.
Time is crucial for Murray Goulburn. Its offer hinges on approval from the Australian Competition Tribunal, which could take up to six months.
In a statement to the ASX, Murray Goulburn said its fresh offer gave shareholders ‘‘demonstrably superior value’’ and despite the length wait from the tribunal was ‘‘simple and straight forward’’.
‘‘We urge WCB shareholders to seriously consider the benefits of MG’s revised offer – this is an important decision that will have significant ramifications for the future of the Australian dairy industry as a whole.
‘‘The revised offer … delivers an Australian owned and operated company with the scale, capacity strength and momentum to capture global growth opportunities.’’
Murray Goulburn had previously offered $9 cash per share, which if successful would take its debt gearing to almost 57 per cent.
‘‘MG expects that the WCB board will engage expeditiously with MG to deliver a positive recommendation for MG’s revised offer,’’ Murray Goulburn said in a statement, adding that it was $2.01 a share higher than the independent assessment WCB received from KPMG.
Murray Goulburn managing director Gary Helou said on Tuesday that at $9, the bidding war for WCB had hit «nosebleeding» levels.
But he said while it appeared to be overvalued, particularly when you look at WCB’s price/earnings ratio, it wasn’t a lot of dollars for global dairy behemoths to shell out.
WCB’s board is expected to meet this afternoon to discuss Murray Goulburn’s fresh bid.
But in a statement to the ASX, WCB highlighted that the bid is subject to previously announced conditions.
Chief executive David Lord told BusinessDay earlier this month that it would be difficult for the board to support a revised offer from Murray Goulburn while its bid relies on approval from the competition regulator, saying other bidders could walk away in the time it takes for the tribunal to decide or MG’s offer.
The new offer comes a day after Murray Goulburn protested to the Takeovers Panel that Saputo had ‘‘misinformed’’ WCB shareholders.
Saputo said it would pay shareholders an extra 20 cents, or $10 million, if its stake reached 50 per cent. But Murray Goulburn managing director Gary Helou said this was effectively a reduction, since WBC was going to pay 56 cents in franking credits if Saputo hit 50 per cent.
Rivkin Securities director Shannon Rivkin said Murray Goulburn’s revised offer might still not be enough to sway the WCB board, which has been recommending Saputo’s offer to shareholders.
‘‘Considering this bid is conditional on 50.1 per cent acceptances, this is an increase of only 30 cents (3.3 per cent) on Saputo’s bid of $9.20 and, in my view, is short of what Murray Goulburn needs to pay for the WCB board to abandon the far more certain Saputo offer.’’
But Mr Rivkin said he expected Saputo to match the bid.
“The WCB board may simply reject the new Murray Goulburn offer, but it would be far easier for the board to reject if it could get Saputo to commit to the extra 30 cents, which I think is a strong chance.”
Source: Sydney Morning Herald