Saputo moves closer to total control of WCB

SAPUTO yesterday passed another milestone in its acquisition of Warrnambool Cheese and Butter (WCB).

The Canadian processor increased its holding to 81.4 per cent of the register, placing it in the position where acquisition of the 10 per cent owned by Japanese-owned Lion would trigger compulsory sale of the remaining shares and delisting of WCB.

Saputo’s offer closes this evening, marking the end of the period when shareholders can accept its offer of $9.40 per share, increasing to $9.60 if it gains more than 90 per cent of the register.

Lion has stated that it has no intention of selling the 10 per cent stake which it bought in the middle of the bidding war to protect its cheese supply agreements with WCB.

Lion’s holding, worth about $53 million, is now the only barrier to Saputo’s ambition to gain full control of WCB — as long as Lion holds onto its stake, WCB will remain listed on the Australian Securities Exchange, even if it ends up with only two shareholders.

Meanwhile, Bega Cheese, which started the bidding war for WCB in September but eventually pulled out of the race in the face of the high cash bids from Saputo and Murray Goulburn, is enjoying solid support on the stock exchange.

An average of nearly 200,000 Bega shares have been traded each day for the past week at prices in the $4.90 to $4.92 range. Yesterday they surged to $4.98 on a traded volume of 173,000 shares. 

The share price is now 80 per cent higher than it was in August. Bega accepted Saputo’s offer in December and walked away cashed up to the tune of $95 million, of which about $65 million was profit, thanks to the soaring share price.

The company, which owns two factories at Bega as well as Tatura Milk Industries in the Goulburn Valley and a plant in Coburg, is widely anticipated to use the cash to pursue alternative development projects.

shynes@fairfaxmedia.com.au

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