Investors smiling at cheese bid
Shares in Warrnambool Cheese and Butter continued to soar yesterday after news broke that Canadian diary giant Saputo wants to buy into the Australian market via the company.
Saputo has had its eye on Warrnambool for a decade, and has pounced on the Victorian business to trump a recent takeover offer from Bega Cheese.
The market is now waiting and watching to see what Bega might do in response to the offer and as a major shareholder in WCB.
The company’s shares have climbed 60 per cent since Bega first made its takeover intentions known on September 12.
They traded six months ago at around $3.80 and yesterday opened at $6.46 and closed at $7.18 after Saputo launched a $7 a share takeover deal, more than Bega’s $319 million offer.
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The Canadian bid won unanimous backing from the Warrnambool board.
Saputo chief executive Lino Saputo said the company planned to invest in Warrnambool to boost production and use the business to increase its presence in Asia.
If the takeover is successful, Saputo says it plans to retain the Warrnambool name and its brands including Sungold Milk, and Great Ocean Road.
It also says it has no plans to cut staff numbers, and will in fact lift production at its Allansford facility.
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WCB also has facilities in Mount Gambier and Port Melbourne.
Saputo also plans to develop new products under the Warrnambool name and use the business to introduce some of its own products to Australia.
“We would see Warrnambool as a platform for growth in Australia and through which to expand in the Asia-Pacific region,” Saputo told reporters on Tuesday.
Toronto-based Saputo currently operates in Canada, the US and Argentina, and has a market value of more than $C9.67 billion ($A9.94 billion).
Warrnambool boss David Lord said the offer showed the board was justified in rejecting Bega’s lower offer a fortnight ago.
The company’s shares jumped 72 cents, or 11.2 per cent, to $7.18.
Saputo’s takeover will need approval from Australia’s Foreign Investment Review Board, and acceptance from the majority of Warrnambool’s shareholders.
Its largest shareholders are Bega Cheese and fellow cheese maker Murray Goulburn, who own 18 and 17.5 per cent of the company respectively.
Saputo has its eye out for other acquisitions and says its relatively low debt levels give it room to make further purchases.
“We have an appetite to grow, most of that growth will come from acquisitions and of course if there are other assets available for sale we will be part of that process,” Saputo said.
– additional reporting by Kevin Naughton
