Murray Goulburn pulls out of WCB fight

Dairy co-operative Murray Goulburn has taken a swipe at Australia’s regulatory process as it conceded defeat in the battle for Warrnambool Cheese and Butter Factory (WCB) to Canadian dairy giant Saputo.


Murray Goulburn said on Thursday it would sell its 17.7 stake in WCB to Saputo, pushing Saputo’s stake in WCB past 75 per cent and consequently lifting Saputo’s offer price to $9.40 per WCB share.

Murray Goulburn, Saputo and Australia’s Bega Cheese were involved in a prolonged three-way tussle for control of WCB. Bega allowed its bid to lapse in December.

Murray Goulburn will withdraw its application to the Australian Competition Tribunal to have its bid for WCB authorised on the grounds that a takeover of WCB by Murray Goulburn would be of benefit to the public.

Murray Goulburn managing director Gary Helou said Murray Goulburn felt confident that it had a compelling case to obtain authorisation from the tribunal.

But after Saputo acquired a controlling interest in WCB of more than 50 per cent, Murray Goulburn was obliged to its shareholders to maximise the financial outcome.

Murray Goulburn was critical of the long regulatory process that it had to go through, saying Saputo had received Foreign Investment Review Board (FIRB) approval for its bid in a far shorter timeframe than the process that Murray Goulburn was required to follow.

“From the point that Saputo was granted FIRB approval, the Murray Goulburn offer was not capable of being acted on by WCB shareholders in the same time period,” Murray Goulburn said in a statement.

“Consequently, Murray Goulburn was not able to compete realistically on a level playing field with a competing international bidder for WCB.”

Mr Helou said Murray Goulburn was disappointed to have missed out on the opportunity to acquire WCB, but was pleased that the co-operative’s involvement in the bidding process had driven a genuine auction of WCB.

Murray Goulburn will receive at least $92.9 million for the sale of its stake to Saputo, and make a gain before tax and costs of about $51 million.

The proceeds would support reinvestment in Murray Goulburn’s business, growing market share in Australia and expansion internationally.

Saputo had offered an unconditional $9.00 per WCB share, with the offer price rising if certain share thresholds were met.

The offer price rose to $9.20 when Saputo’s stake passed 50.1 per cent, to $9.40 at more than 75 per cent, and will go up to $9.60 if it passes 90 per cent.

At the time that Bega Cheese initiated the battle for WCB in September 2013, WCB shares were trading at $4.51.

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