Australia’s oldest dairy producer Warrnambool Cheese & Butter (WCB) has recommended a takeover bid from Canada’s largest dairy processor Saputo Inc.
The company, with processing centres in Mount Gambier, Allansford and Port Melbourne emplys 480 people, has been producing dairy products for more than 120 years.
WCB directors had recently rejected an offer from Bega Cheese Ltd.
In a statement to the Australian Securities Exchange today, WCB said it had entered into a takeover bid implementation deed with Saputo, which will make an all cash off-market takeover offer of $7.00 per share for all shares on issue.
The companies have agreed WCB may declare and pay fully franked special dividends of up to a maximum of $1.31 per WCB share, with a corresponding reduction in the offer price, on Saputo reaching specified relevant interest thresholds in WCB.
This would enable distribution of franking credits that could deliver up to an extra 56 cents per share in value.
WCB directors last month unanimously recommended shareholders reject Bega’s offer of 1.2 Bega shares and $2.00 cash for each WCB share, saying the offer was inadequate.
The offer is subject to conditions including Foreign Investment Review Board approval and a minimum acceptance condition of more than 50 per cent of WCB shares.
“The Board of Warrnambool Cheese and Butter Factory Company Holdings Limited unanimously recommends shareholders accept Saputo’s Offer, in the absence of a superior proposal,” the compnay statement said.
“The headline Offer price of $7.00 cash per WCB share represents a 57 per cent premium to the one month volume weighted average price of $4.46 per WCB share calculated up to and including 11 September 2013, being the last trading day before Bega’s offer was announced.
“Saputo’s Offer is superior to Bega’s offer in terms of value and conditionality.
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“Saputo has made strong commitments to WCB suppliers, employees and the retention of WCB’s corporate identity and brands.”
CEO and Managing Director of WCB, David Lord, said the offer will give shareholders certainty.
“Saputo’s Offer underscores the strategic value of WCB’s assets and vindicates the Board’s decision to reject Bega’s inadequate, highly conditional offer,” Lord said.
“Saputo’s all cash Offer provides greater certainty for WCB shareholders and a substantial premium for their WCB shares.”
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