Food In Canada

UPDATE: Canadian dairy may need to up the ante to acquire Australian company

By Food in Canada magazine staff   

Business Operations milk processing

An analyst says Saputo Inc. may need to up the ante when it comes to the dairy giant’s bid to take over Australian Warrnambool Cheese and Butter Factory, one of Australia’s oldest dairy producers

Montreal – One of Canada’s largest food processors, a cheese and dairy giant, wants to expand into Asian markets and is looking to acquire an Australian company to do it. But an analyst says it may have to add to its take over bid if it wants to succeed.

Saputo Inc. has put an offer to acquire Warrnambool Cheese and Butter Factory in Australia for Cdn$378 million.

Warrnambool is one of the largest milk processors in the country.

The says Saputo had been interested in the Australian company for the last decade. And the company hopes it will lead to other deals in the country.


In September, Warrnambool was the subject of another takeover offer by Bega Cheese Limited. Bega Cheese’s offer was $319 million, which had initially won unanimous backing from the Warrnambool board. Bega Cheese is based in the Bega Valley in Australia and says more than 60 million Bega branded products are sold throughout Australia each year.

The reports that Warrnambool’s board recommended shareholders accept Saputo’s offer instead, calling it a superior offer – unless a better offer comes along.

“Saputo has made strong commitments to Warrnambool Cheese and Butter suppliers, employees and the retention of Warrnambool Cheese and Butter’s corporate identity and brands,” the board said.

Now, reports the, analyst Mark Petrie with CIBC World Markets says the offer my not be enough. Petrie also says he doesn’t believe the offer will go through as it stands now. For one thing, Bega Cheese is still keen and has an 18 per cent equity stake.

Warrnambool operates two manufacturing sites in South West Victoria and South Australia and employs more than 420 people. It’s been producing dairy products for more than 120 years.

The company produces a range of dairy products for domestic and export markets. Its products include cheese, butter and butter blends, milk, cream and dairy ingredients. The company had revenues of Cdn$479 million in 2012.

The reports that Saputo plans to invest in Warrnambool to boost its production and use the business to increase its presence in Asia.

Saputo also plans to retain the Warrnambool name and its brands including Sungold Milk and Great Ocean Road.

There are no plans to cut staff members and in fact Saputo plans to increase production at Warrnambool’s Allansford facility.

The also reports that Saputo plans to develop new products under the Warrnambool name and use the business to introduce some of its own products to Australia.

Saputo’s takeover will need approval from Australia’s Foreign Investment Review Board, says, and acceptance from the majority of Warrnambool’s shareholders.

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