MURRAY Goulburn is to sell its holding in Warrnambool Cheese and Butter (WCB) to Saputo following the Canadian company’s acquisition of a controlling interest in the Allansford processor.
Saputo’s shareholding in WCB passed the 50 per cent threshold on Wednesday, ending the hard-fought battle for control of the company.
Murray Goulburn holds 17.7 per cent of the WCB register. Selling the shares will give Saputo 75.4 per cent ownership, triggering the next increase in the incremental share price. All shareholders will now receive $9.40 per share, giving Murray Goulburn a cash return of $92.9 million and a profit on investment of $51 million before tax and costs.
Murray Goulburn will also seek approval from the Australian Securities and Investments Commission to withdraw its application from the Australian Competition Tribunal.
Speaking to The Standard yesterday, managing director Gary Helou said the sale was the best option for the co-operative.
“In light of Saputo acquiring a controlling interest we have an obligation to our shareholders to maximise the financial outcome and focus management time on growing a strong and globally competitive co-operative,” Mr Helou said.
“Whilst we are disappointed to have missed out on the opportunity to acquire WCB, we are pleased that our involvement in the bidding process drove a genuine auction and that all WCB shareholders have benefited as a result,” Mr Helou said.
He said the cash proceeds would support alternative investment plans, including expansion of the Koroit facility.
Mr Helou said Murray Goulburn would be seeking other opportunities to consolidate the Australian dairy industry.
He was critical of the regulatory system that placed the co-operative at a disadvantage by allowing Saputo to proceed while Murray Goulburn awaited regulatory clearance.
“When you have two companies seeking clearance through different agencies there needs to be consideration of the timelines involved to place everyone on an even playing field,” Mr Helou said.
The only remaining large shareholder is now Japanese company Lion, which bought a 10 per cent blocking holding in the middle of the takeover battle to protect its cheese supply contracts with WCB.
Saputo needs Lion’s holding plus about half of the shares remaining in smaller holdings to exceed 90 per cent, at which point all shareholders would be forced to sell.