WARRNAMBOOL Cheese and Butter (WCB) shareholders have 30 days to decide whether the processor is sold to a foreign entity.
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The potential takeover bid by Canadian company Saputo cleared a foreign investment hurdle yesterday as debate raged over whether the move was in Australia’s best interests.
In a dramatic day for the Allansford processor:
- Treasurer Joe Hockey unconditionally approved Saputo’s foreign investment application;
- WCB board reiterated its support for the Saputo bid following the release of its target statement;
- Prime Minister Tony Abbott told Sydney radio he was hopeful an Australian company takes over WCB;
- Bega chief executive Barry Irvin vowed to continue the fight to buy out WCB; and
- WCB’s closing share price yesterday was $8.54, a one per cent rise on the previous day’s close.
Almost 500,000 shares were traded on the stock exchange yesterday, compared to only 39,000 on Monday.
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WCB chief executive David Lord said yesterday’s Foreign Investment Review Board (FIRB) decision cleared the way for shareholders to accept Saputo’s offer.
He said a Canadian takeover would provide ongoing competition in the south-west dairy market. “In a nutshell, the Saputo offer is compelling value for shareholders,” Mr Lord said.
“It’s the highest price, a cash offer that provides maximum profitability.
“We hoped this would be resolved by Christmas but it’s now quite hard to put a specific timeframe on it (the potential takeover).”
Mr Irvin said the race was far from over, with the NSW processor Bega “assessing all its options”.
He said yesterday’s FIRB approval was akin to Bega making the ACCC grade a fortnight ago.
“There’s a lot more water to flow under the bridge. We’ll be looking at our options over the coming weeks,” Mr Irvin said.
The Prime Minister told Sydney’s 2GB radio he wanted to “wait and see” which company became the favoured bidder but preferred an Australian option.
“I think all of us emotionally hope it’s Bega Cheese or Murray Goulburn,” Mr Abbott said.
“The fact that there are so many businesses, local and foreign, (interested in WCB) means that it’s obviously a very good business itself and all credit to the people behind Warrnambool Cheese and Butter.”
Saputo chief executive Lino Saputo jnr said the company had the “strategic intent and financial capacity” to invest further in WCB.
“Saputo’s offer provides the opportunity to grow the industry locally as well as fast-track penetration into valuable export markets,” Mr Saputo said.
“Warrnambool will be at the heart of Saputo’s Australian operations, while also creating a platform for growth into the Asia Pacific region.”
Saputo is listed on the Canadian stock exchange and was $49.20 a share at 5pm yesterday.
Mr Hockey’s announcement yesterday is the Abbott government’s first major foreign investment approval since coming to power two months ago. The United Dairyfarmers of Victoria expressed disappointment at Mr Hockey’s unconditional approval.
alex.sinnott@fairfaxmedia.com.au
