Friday, October 31st7.9°C
23888
23883

Saputo gains majority control of 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.

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.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX14458.69-68.88
S&P CDNX771.65-9.42
DJIA17195.42221.11
Nasdaq4566.138+16.912
S&P 5001994.65+12.35
CDN Dollar0.8919-0.0015
Gold1176.00-22.60
Oil80.48-0.42
Lumber322.40-1.20
Natural Gas3.715+0.066

 
Okanagan Companies
Pacific Safety0.11+0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.150.00
Cantex0.045-0.015
Anavex Life Sciences0.1711-0.0089
Metalex Ventures0.0350.00
Russel Metals32.22-0.35
Copper Mountain Mining1.97-0.05
Colorado Resources0.14+0.005
ReliaBrand Inc0.012-0.004
Sunrise Resources Ltd0.05+0.025
Mission Ready Services0.375+0.005

 



22625

FEATURED Property
212048628-2155 Horizon
$569,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Empty nesting: financial issues

Now that the children have ‘left the nest’, it is a good time to step back and take stock of your financial situation. Being on your own will probably cut household costs to some extent, b...


Keep your haunted home safe

Eerie sounds, spooky lights and Jack-o’-lanterns aglow—extra efforts at Halloween will keep visitors coming back for both tricks and treats. However, to keep the fun going, it’s imp...


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...

_








Member of BC Press Council


22786