MONTREAL - Canadian cheese giant Saputo Inc. has increased its offer for Australian dairy processor Warrnambool Cheese and Butter by a dollar to A$8 per share.
Saputo (TSX:SAP) says the all-cash bid is a seven per cent premium to the rival offer of A$7.50 by Australia's Murray Goulburn Co-operative Co. Ltd.
It also represents a 20 per cent premium to another bid, this one a cash and scrip offer announced by another Australian concern, Bega Cheese Ltd.
"In response to the offer price increase by Saputo, the board of Warrnambool has reaffirmed their unanimous recommendation that Warrnambool shareholders accept the offer in the absence of a superior proposal," Saputo said in a release late Thursday.
Based Warrnambool's current share value, the purchase price for 100 of its shares of would be about $444 million and would be funded out of Saputo's new $500-million, three-year bank term loan, Saputo said.
Murray Goulburn mounted an unsuccessful effort in 2009 to buy Warrnambool and currently owns about 18 per cent of its shares. Bega holds about the same number.
Saputo, faced with intensified competition and limited growth opportunities in Canada, has focused on expansion in the United States, Latin America and Oceania.
Australia exports nearly half of its milk production, accounting for about 10 per cent of the global export market.
The Canadian company also sees the bid for one of Australia's largest and oldest milk processors as providing a springboard to expand in Asia, which it currently supplies from Argentina.