Chinese investment interest in Warrnambool Cheese and Butter

SPECULATION that Chinese investors have joined the fight for ownership of Warrnambool Cheese and Butter (WCB) doesn’t surprise Warrnambool’s mayor Michael Neoh, who knows first-hand how highly the south-west dairy industry rates internationally.

Six months after he led a delegation of Warrnambool community and business delegates to Changchun in north-east China, Cr Neoh yesterday took note of speculative media posts indicating China Investment Corporation was backing a Chinese food group interested in acquiring WCB.

Reportedly the State Council of the People’s Republic of China’s investment arm is keen to take advantage of rapid food price inflation.

WCB already has a foothold in the Chinese market with a three-year $24 million export deal with Toon Yeuan Enterprise to sell lactoferrin dairy extract.

An industry source said Bega could be enticed to sell its 18.7 per cent WCB stake to a Chinese bidder that offered $10 a share.

Canadian Saputo and Victorian-based Murray Goulburn Co-operative are the remaining main bidders.

WCB directors are backing Saputo’s $9-plus offer while Murray Goulburn’s $9.50 offer is subject to a ruling from the Australian Competition Tribunal.

Cr Neoh said the Changchun visit revealed keen interest in south-west Victoria’s rural products and there was an unofficial inquiry about companies that may be for sale.

“I think this is a realisation of south-west Victoria being the epi-centre of dairying in Australia,” he said.

“Fulfilling a goal to doubling production won’t be easy, but it would go some way to meeting the demand of south-east Asia.

“We would be happy to take any inquiries from the Chinese and channel them to the appropriate people.”

Last week WCB announced it would double first-half earnings due to strong international dairy demand and pricing, a falling Australian dollar and an improved product mix.

The takeover bidding  has pushed WCB shares to record highs and valued the Allansford company at more than $500 million, making it the world’s most expensive dairying company.

More than 16,000 shares were traded yesterday with prices closing at $9.27.

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