Lion share purchase adds new roar to Warrnambool takeover battle

By Fiona Barry

- Last updated on GMT

Lion's Cracker Barrel cheddar cheese is manufactured by Warrnambool
Lion's Cracker Barrel cheddar cheese is manufactured by Warrnambool
The battle to acquire Warrnambool Cheese & Butter (WCB) has taken a new turn, with New Zealand-based food and beverage company Lion acquiring a 9.99% shareholding in the Australian dairy processor.

WCB has received a flood of unexpected takeover offers in recent weeks, from Canadian dairy giant Saputo, Australian co-op Murray Goulburn, and smaller Australian producer Bega Cheese.

Citing a Lion insider, the Wall Street Journal​ reported earlier today that the company has no plans to launch a takeover bid for WCB.

The insider claimed instead that the share purchase was designed to allow Lion to influence and block takeover deals between WCB and third parties.

Unknown future

Lion, which is owned by Japanese dairy and beer giant Kirin, has an existing agreement with WCB, which manufactures cheddar cheese for two of Lion’s brands, Cracker Barrel and Coon.

In a statement issued earlier today, Lion gave away few clues regarding the reason for its share purchase. 

"Lion has enjoyed a close relationship with WCB over many years and WCB plays an important role in Lion’s cheese business," ​said the statement.

The statement added that the company “considers this stake a continuation and strengthening of this relationship​.”

Mystery spikes shares

Lion's unexpected share purchase forced the price of Warrnambool up by more than 10% today, peaking at AUS$9.30 ($8.83) per share at midday in Australia.

Among the takeover contenders is Australian dairy cooperative, Murray Goulburn. Saputo is, however, currently leading the race to acquire WCB, after the company's board of directors unanimously advised shareholders on October 25 to accept the Canadian dairy giant's offer of AUS$8.00 ($7.60) cash per share, in the absence of a superior proposal.

The proposal is higher than Murray Goulburn’s offer of $7.50 ($7.12) per share, and Bega Cheese’s tender of AUS$2.00 ($1.93) cash and 1.2 Bega shares per WCB share.

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