Saputo Wins Control of Warrnambool in Australian Dairy Chase

Canada’s biggest milk processor has won control of Warrnambool Cheese & Butter Factory Co., Australia’s oldest dairy producer.

Saputo Inc., Canada’s biggest milk processor, won control of Warrnambool Cheese & Butter Factory Co. as it secured more than half of the shares in Australia’s oldest dairy producer following a three-way tussle.

Montreal-based Saputo holds 52.7 percent of Warrnambool, the maker of Sungold milk, it said today in a statement. The deadline for the offer that values Warrnambool at a maximum of A$537 million ($475 million) will be extended by two weeks. It had been scheduled to close by 7 p.m local time today.

Warrnambool, which also makes Great Ocean Road cheese, has more than doubled in market value since an initial bid by Bega Cheese Ltd. in September began a contest for the company with Saputo and Melbourne-based Murray Goulburn Cooperative Co.

"Saputo has to find financial gains in Asia to justify a large purchase here as a beachhead acquisition," said Paul Jensz, a Melbourne-based analyst at PAC Partners Pty. "It’s a stretch from a financial point of view."

Victoria-state based Warrnambool rose 1.2 percent to A$9.42 at the close of Sydney trading.

Buying Warrnambool gives Saputo export infrastructure and production capacity to meet rising demand for dairy in Asia. Milk consumption will jump 27 percent between 2012 and 2020 to 14 billion liters in Southeast Asia’s six-largest economies, agricultural researcher Rabobank said in a July report.

Increasing Offer

Saputo will pay a maximum of A$9.60 a share in cash should it gain more than 90 percent of Warrnambool, it said Dec. 17 in a statement. After securing more than 50 percent of Warrnambool, Saputo will pay A$9.20 a share, which will rise to A$9.40 should it obtain more than 75 percent, it said today in a separate statement.

Bega, which withdrew its offer last month for the dairy producer, said on Jan. 16 it had agreed to sell its 18.8 percent stake to Saputo.

Saputo should seek to secure Murray Goulburn’s 17.66 percent stake and Kirin Holdings Co.’s 10 percent interest in Warrnambool, Jensz said. Murray Goulburn is the producer’s second-largest shareholder and Kirin is the third biggest, according to data compiled by Bloomberg.

Murray Goulburn has offered A$9.50 a share in a bid that requires approval from the Australian Competition Tribunal.

"Given Saputo’s offer period is automatically extended for a further 14 days, Murray Goulburn will now commercially assess this development," it said today in a statement.

Leela Sutton, a spokeswoman for Lion, Kirin’s Australian unit, declined to comment on the company’s intentions.