Murray Goulburn has challenged Canadian giant Saputo’s attempted acquisition of Warrnambool Cheese and Butter (WCB) with an offer that, if accepted, would create one of the largest Australian food and beverage firms.
Dairy co-operative Murray Goulburn proposed a buy-out of all WCB shares at AUS$7.50 ($7.23) cash per share, an offer which values the Australian dairy manufacturer at AUS$420m ($405m).
The combined annual revenues of the two firms are forecast by Murray Goulburn in excess of AUS$3.2 bn ($3.1bn), including export sales of AUS$1.4bn ($1.35bn).
The proposal challenges that made by Canadian processor Saputo of AUS$7.00 ($6.77) per WBC share.
‘Murray Goulburn Warrnambool’?
If accepted, a takeover by Murray Goulburn would create one of the largest Australian food and beverage firms, with annual revenues forecast by Murray Goulburn in excess of AUS$3.2 bn ($3.1bn), including export sales of AUS$1.4bn ($1.35bn).
The total milk supply of the two firms is forecast to be more than four billion litres in the financial year 2014-2015.
Murray Goulburn stated if its offer was accepted, it would rename the combined business, with 3,000 suppliers and nine processing sites, Murray Goulburn Warrnambool.
Warrnambool considering unsolicited offer
WCB said it was not aware of Murray Goulburn’s intention to make an unsolicited off-market takeover bid for all Warrnamboul shares until Murray Goulburn’s announcement today. WCB’s directors advised its shareholders to take no action until the board had met to consider the offer.
Murray Goulburn chairman, Philip Tracy, said: “This is an historic opportunity for Murray Goulburn and WCB suppliers and shareholders to create a larger scale, globally competitive Australian dairy food company owned and controlled by Australian dairy farmers.
“Importantly, it will retain the primary objectives of a co-operative in maximising farm gate returns for farmer owners. It will also support on-farm and industry investment, and in turn grow the Australian dairy industry for the benefit of regional communities.”
Murray Goulburn said it believes a unanimous recommendation “should be forthcoming” from the WCB board that WCB shareholders accept the offer, “given that Murray Goulburn’s offer is clearly superior to Saputo’s and is above the top end of the Independent Expert’s value range for WCB.”
Growing Australian dairy
Murray Goulburn Managing Director, Gary Helou, said “We believe the formation of an Australian co-operative controlled by both Murray Goulburn and WCB suppliers provides significant benefits to all stakeholders, keeping profits onshore, maximising total farm gate returns to farmer shareholders and increasing the capacity for significant investment in the domestic dairy sector and individual communities.”
Helou said the offer would be attractive to shareholders who would “have the opportunity to contribute to the formation of a globally competitive Australian dairy food company that will act forthrightly and decisively in the interests of its suppliers and their communities.”
In turn, “WCB suppliers, who would be invited to join the co-operative, could benefit from direct participation in a globally competitive, large-scale enterprise to enable the Australian dairy sector to maximise the benefits of expected local and international growth in demand for high quality foods,” said Helou.
In a letter to shareholders on October 9, WCB directors rejected a third, lower offer by Australian processor Bega Cheese, which already owns 18% of WCB. Bega tendered 1.2 Bega shares and AUS$2.00 ($1.93) cash per Warrnambool share, valuing WCB at AUS$319m ($308m).