Warrnambool Cheese and Butter (WCB) has advised shareholders to accept an all-cash takeover bid by Saputo.
WCB directors unanimously recommended that shareholders accept the off-market offer of $7 per share.
The bid by Canadian company Saputo follows a takeover offer to shareholders by Bega Cheese, offering them 1.2 Bega Cheese share plus $2 for each WCB share.
This offer, now on the table, is currently valued at $6.30 and is worth about $392 million in total.
The Saputo offer is 54 cents above the level at which WCB shares are trading on the stock exchange.
Saputo made an unsuccessful bid to take over WCB in 2009 and last year bought US dairy company Morningstar for $1.45 billion (US).
WCB chairman Terry Richardson said Saputo’s offer had greater commitments to WCB suppliers, customers and employees, while chief executive David Lord described the deal as the best for shareholders.
"Saputo's offer underscores the strategic value of WCBs assets and vindicates the board's decision to reject Bega's inadequate, highly conditional offer," he said.
"Saputo's all-cash offer provides greater certainty for WCB shareholders and a substantial premium for their WCB shares."
The deal is subject to approval from Australia's Foreign Investment Review Board and Saputo receiving at least 50 per cent of Warrnambool shares.