BEGA Cheese has made a surprise bid to take over Warrnambool Cheese and Butter (WCB).
The New South Wales company has made an off-market offer of 1.2 of its own shares plus $2 for every WCB share.
The reported $320 million takeover offer is open to all the WCB shares outside of the 18 per cent Bega Cheese already owns.
The offer is 28 per cent above yesterday's closing price of $4.51.
WCB is Australia's oldest dairy processor but has operated with speculation of takeover in recent months as rival Murray Goulburn also holds a substantial shareholding, increasing its own stake from 12 per cent to 14.5 per cent.
Bega Cheese reported a strong result in the past financial year, with revenue up 12 per cent from $614 million to $690 million, with domestic contract packaging demand contributing the majority of the increase.
In 2010 WCB chairman Frank Davis said Bega's cornerstone 15 per cent investment in the company had allowed WCB to "reduce significantly its debt and provide capital to pursue future growth options."
At the time of the deal it was considered a move that could trigger more consolidation in the dairy industry.