Most dairy farmers are not surprised by the foreign takeover of Australia’s oldest dairy company, and are anxious to see its effect on milk prices.
The Australian Stock Exchange has halted trade in Warrnambool Cheese and Butter, at the request of its new majority shareholder, Canadian company Saputo.
Saputo now has a controlling shareholding in WCB of 52.7 per cent, which has triggered an automatic two-week extension of Saputo’s offer period.
Shareholders who’ve sold to Saputo will receive $9.20 a share, but that will increase to $9.40 if its stake in WCB increases to 75 per cent, and $9.60 if it gains more than 90 per cent of the shares.
Rival bidder Murray Goulburn has issued a statement saying it will now assess the development before making further comment.
It currently owns 17.7 per cent of WCB shares.
The announcement comes after a four-month bidding war for WCB, based at Allansford in south-west Victoria, between Saputo, Murray Goulburn and Bega Cheese.
Warrnambool Cheese and Butter chief executive David Lord is “very pleased” Saputo now has a controlling stake, after the WCB board backed the Canadian bid in preference to the rival Australian bidders.
Mr Lord is confident the remaining minority shareholders, including Murray Goulburn, will now sell.
He says that while Saputo works in a highly regulated market in Canada, it has some experience exporting to the United States and Argentina, though it still has a lot to learn about the international dairy market.
Mr Lord says it will be up to the newly structured board to decide if he stays on as CEO, which, he says, he would like to do.
Stockmarket analyst Bill Richmond thinks Saputo is highly likely to end up with more than 90 per cent of WCB shares, if Murray Goulburn does decide to sell its stake.
I’m just dying to know what our opening price is going to be next season. Everybody’s after milk, it’d better be good.
Dairy farmer and WCB supplier, Lorraine Robertson
“One would say that if they did tender their 17.7, it would be a very real possibility that Saputo could get the 90 per cent they require (to pay $9.60 a share), because it would mean other shareholders would be very much minority shareholders and there’s no real benefit in doing that.”
Allendale East dairy farmer and WCB supplier Lorraine Robertson says she’s not surprised by the news.
She says she hopes there will now be more competition for milk.
“I guess Lino (Saputo) will be a very happy chappy, but it’s taken four months and a hell of a lot of cost to get it over the line.
“I’m just dying to know what our opening price is going to be next season. Everybody’s after milk, it’d better be good.”
Garvoc dairy farmer and WCB supplier Mick Lenahan thinks the announcement is a good thing.
“I think it will work out quite well,” he said.
“If they’re going to pay big money for the takeover, they’ll have to take care of the farmers in this area or whatever area they’re in.
“You don’t want all your eggs in one basket, you’ve got Murray Goulburn and Bega and all the rest…but I think it’s great.”
Farmer Lyndon Cleggett, from Glencoe, near Mt Gambier in South Australia, believes Saptuo’s investment in the industry “will be good for us”.
“I’ll just keep watching in interest and hopefully it all does mean it can maximise our farm gate price in the future,” he said.
Curdie Vale dairy farmer Nick Renyard says he’s interested to see what happens next.
“I suppose the conjecture will be around what Murray Goulburn does now. The question will be whether they sell into Saputo to realise the massive gains they’ve had,” he said.
“It will be interesting to see now if Murray Goulburn choose to do that, what they’ll do with the gain in their balance sheet and what Bega intends to do with the gain on theirs, given that they’ve sold.”
Source : ABC Rural