CANADIAN dairy giant Saputo is trying to use the prospect of closing its $500 million takeover offer for ­Warrnambool Cheese & Butter (WCB) to pressure Bega Cheese into selling its 18.8 per cent WCB stake but the Montreal-based company is widely expected to extend its offer.
Saputo’s final $9-a-share cash offer, which has been recommended by WCB’s board, is scheduled to close on Friday and sources close to the company maintain no decision has been made to extend the offer.

But the company is thought to be using the threat of walking away to snag as many shareholder acceptances as possible.

Saputo is fighting ­Australia’s biggest dairy exporter, ­Murray Goulburn, for control of WCB and has shown commitment to winning the battle.

Saputo, which has eyed WCB for more than a decade, has raised its initial $7-a-share bid for WCB twice to $9 a share.

Murray Goulburn, which owns 17.7 per cent of WCB, has put a $9.50-a-share cash offer on the table but its bid is conditional on getting 50.1 per cent of WCB and approval from the Australian Competition Tribunal.

The Australian Competition and Consumer Commission – which is assisting the tribunal – has raised a series of problems with Murray ­Goulburn’s argument that the acquisition would boost exports and bolster the Australian dairy industry without lessening competition.

The WCB board already had ­significant problems with the uncertainty of the tribunal process.

The ACCC’s issues paper has strengthened those concerns.

The tribunal has ­indicated it wants to make a decision on Murray Goulburn’s bid by the end of February, and the two potential ­kingmakers in the deal, Bega Cheese and Japan’s Lion, are in no rush to sell.

Lion is interested in protecting its ­commercial contracts with WCB and wants to use its 10 per cent WCB stake as leverage in final negotiations.

Source: Financial Review