Murray Goulburn (MG) will receive at least $92.9 million after withdrawing its bid for Warrnambool Cheese & Butter (WCB) and selling its 17.7 per cent stake to Saputo.
The sale would result in a gain on investment before tax and costs of $51 million according to MG.
Prior to MG's announcement, Saputo had acquired 57.7 of WCB. MG's acceptance of Saputo's offer will increase the value for WCB shares in the offer to at least $9.40, as it would take Saputo's stake in WCB above 75 per cent.
“The sale of our WCB shareholding represents an excellent financial outcome for our co-operative,” MG's managing director, Gary Helou said.
He said the cash proceeds would enable MG to grow market share in Australia and expand internationally, and increase underlying farmgate returns.
However, Helou also said MG considered it a “lost opportunity for the Australian dairy industry” that Saputo received Foreign Investment Review Board (FIRB) approval in a “significantly shorter time frame than the process MG was required to follow”.
“From the point that Saputo was granted FIRB, the MG offer was not capable of being acted on by WCB shareholders in the same time period. Consequently, MG was not able to compete realistically on a level playing field with a competing international bidder for WCB,” he said.
MG also said that while the Australian dairy industry remained deeply fragmented, MG remained “committed to consolidation of the sector and will continue to pursue future consolidation opportunities as they arise”.
