Australia's largest milk processor, Murray Goulburn Cooperative Co, had increased its takeover offer for Warrnambool Cheese and Butter Factory Co. The firm had valued its bid at AUD505 million or USD470 million, surpassing two other bids from rival firms.
The per share bid is at AUD9 from the second largest shareholder in Warnambool. The bid is 13% higher than the AUS8 per share offer from Canada's Saputo and is 24% above the Bega Cheese Ltd's bid. This was confirmed by a statement fromt he Melbourne based company.
The three way bidding contest for the manufacturer of brand names such as Sungold milk and Great Ocean cheese had more than doubled the market valuation for Warrnambool in the past couple of months after Bega had opened bidding. The interested parties are seeking to raise production and expand export infrastructure in light of the rising demand coming from Asia.
The new offer made by Murray Goulburn, according to Canaccord Genuity Corp analyst Mark Topy, 'defies any commercial common sense..' He said, "This really is pretty aggressive strategy, they want this asset at all costs, irrespective of how it could endanger their own financial position."
Share prices of Warrnambool increased by 7.1% to AUD9.15 per share at late morning trading at the Sydney bourse. As of close of markets yesterday, the offer from Bega consisting of 1.2 of its own shares on top of an AUD2 cash provision totals AUD7.23 per Warnambool share. Bega's own share value jumped by 7.1% to AUD4.67 per share.
This bidding competition comes as China is setting world records for milk powder products. Dairy demand is also rising in Vietnam, Indonesia and India, as confirmed by Warnambool.
In a statement, Murray Goulburn Chairman Philip Tracy said, "(A combined company) will be uniquely positioned with scale and capacity to capture the unfolding long-term opportunity in international dairy markets."
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