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Australia freezes Saputo’s bid for dairy

Head office and manufacturing company Saputo Inc., seen in Montreal, November 14, 2013.

Christinne Muschi/The Globe and Mail

The Australian Takeovers Panel has slapped an interim order on Saputo Inc. that halts the company's processing of any tenders to its takeover offer in a fiercely fought battle for a dairy producer in that country.

The freeze, imposed on Friday, can last for up to two months and buys time for tenacious Saputo rival Murray Goulburn Co-operative Co. Ltd. to bolster support for its own proposal to take over Warrnambool Cheese and Butter Factory.

As of Friday, Montreal-based Saputo had accumulated 9.6 per cent of the stock in Warrnambool since it reached a friendly agreement to buy the Australian dairy processor last month.

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Earlier this week, Murray Goulburn asked the takeovers panel to block Saputo from buying Warrnambool shares after Saputo raised its offer and said there would be no special dividend, possibly penalizing some Warrnambool shareholders who would lose tax credits.

At the same time, Murray Goulburn trumped Saputo's revised $9.20 (Australian) all-cash offer with a $9.50 bid. But the company, Australia's biggest milk processor, faces an approvals process from the country's competition authorities that could take up to six months.

Saputo's bid has already been cleared by Australian regulators.

Warrnambool's board has recommended that shareholders accept Saputo's offer, but said they will also take the time to consider the new Murray Goulburn bid.

Both the Saputo and Murray Goulburn bids are higher than a third offer from Australia's Bega Cheese Ltd.

Some observers say the bidding war – started by Bega Cheese in September with an initial offer of $5.78 per share – has reached hard-to-justify valuations. Warrnambool has more than doubled its market capitalization since the Bega Cheese bid.

Saputo officials were not available to comment on Friday.

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"An interim order is designed to maintain the status quo until the panel can consider the application in detail," the Australian panel said in a news release Friday. "An interim order does not indicate that the panel has decided to conduct proceedings or necessarily indicate the merits of an application for a declaration of unacceptable circumstances."

Murray Goulburn owns 17 per cent of the Warrnambool shares, while Bega Cheese has an 18-per-cent stake.

Saputo said it's $9.20 per share offer is conditional on its winning a majority stake in Warrnambool.

Saputo president and chief executive Lino Saputo Jr. has said Warrnambool would provide the company with a strategically significant platform in a low-cost milk market from which to export dairy products to Asia and other regions.

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About the Author
Quebec Business Correspondent

Bertrand has been covering Quebec business and finance since 2000. Before joining The Globe and Mail in 2000, he was the Toronto-based national business correspondent for Southam News. He has a B.A. from McGill University and a Bachelor of Applied Arts from Ryerson. More


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