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Cheese and Butter battle nears the end


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Warrnambool Cheese and Butter managing director David Lord is maintaining pressure on takeover bidder Murray Goulburn to end its fight and accept the offer from rival Saputo.

The four-month-long battle for control of Warrnambool (WCB) took a decisive turn on Thursday when Bega Cheese opted to sell its 18.8 per cent stake in the southern Victorian dairy processor to Canadian firm Saputo.

Bega’s decision takes Saputo’s stake in WCB above 45 per cent and close to the 50 per cent mark at which Murray Goulburn cannot proceed with its rival offer.

Lord said he had been confident that shareholders would come to share the favourable view of Saputo’s bid – worth between $9 and $9.60 a share – taken by the WCB board, which has supported the Canadians’ offer from the outset.

On Thursday he pushed for all shareholders – including Murray Goulburn with its 17.7 per cent stake – to sell to Saputo.

“Obviously we welcome Bega’s decision to accept the Saputo offer and we’re pleased that Bega has reached the same conclusion as the WCB board and that is that the Saputo offer is superior,” Lord told AAP.

“We we would be very disappointed if all WCB shareholders didn’t take advantage of what is a significant price premium compared to our share price when this process started.”

Warrnambool shares have risen from $4.51 when bidding began in September, 2013, to $9.40 on Thursday.

Mr Lord said Bega’s decision made the possibility of Saputo gaining a majority holding much more likely.

“From that perspective it’s important now that shareholders really consider their positions carefully,” he said.

Saputo is offering $9 a Warrnambool share but will increase its offer to $9.20 if it secures more than 50 per cent of the stock.

The offer rises again to $9.40 if Saputo secures more than 75 per cent of shares, and to $9.60 if the Canadian firm gains control of 90 per cent or more.

“There is the potential for all shareholders to enjoy incremental increases in the offer price,” Lord said.

Lord said the Warrnambool board was always confident it had recommended the superior offer.

“We were uncertain of anything until today and we really welcome the decision that Bega have made,” he said.

“I think we are certainly getting a lot closer to a point where there will be some certainty around the future ownership of the business.”

Murray Goulburn said in a statement on Thursday that it was assessing the ramifications of Bega’s decision.

Another key player, Lion, which holds 9.99 per cent of Warrnambool, made no comment on its intentions.

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