Quebec-based Saputo, Canada's biggest dairy processor, announced a takeover offer of AU$7 ($6.60) per share yesterday. The board of Warrnambool has universally recommended its shareholders accept the cash offer.
Based on current share capital, the purchase price for 100% of the shares of Warrnambool would equal approximately $366m (AU$387m, CA$378m), according to Saputo.
If completed, the deal represents Saputo’s first steps in Australia.
Warrnambool is one of the largest milk processors in Australia, with facilities in South Australia and South West Victoria, employing over 420 people. It supplies cheese, butter, milk and dairy ingredients.
‘Unanimous’ recommendation
David Lord, Warrnambool CEO, said “The Board has carefully considered Saputo's Offer and has decided to unanimously recommend that WCB shareholders accept Saputo’s offer, in the absence of a superior proposal.
“Saputo's offer underscores the strategic value of WCB’s assets and vindicates the Board’s decision to reject Bega’s inadequate, highly conditional offer. Saputo's all-cash offer provides greater certainty for WCB shareholders and a substantial premium for their WCB shares.”
In the last financial year, Warrnambool’s revenue totalled $462m (AU$496m, CA$477m). The company predicted EBITDA (earnings before interest, tax, depreciation and amortisation) of $44-48m (AU$46-51m, CA$45m-CA$50m) for the 2013-2014 financial year.
The purchase will be funded by Saputo’s three-year bank loan, arranged by the National Bank of Canada and Bank of Montreal.
Saputo says the offer is expected to close in early December 2013.
Withdrawing from Europe
The tender comes after Saputo announced earlier in 2013 the planned closure of its European operations. Its cheese factory in Newcastle Emlyn, Wales, was bought by Dairy Partners of Wales in 2013, while a cheese-manufacturing facility in Heiden, Germany, is set to shut down. Saputo maintains facilities in Canada, the US and Argentina.
Saputo’s products include Nutrilait fresh milk in Canada, and Frigo Cheese Heads, a string cheese snack, as well as products sold under the Saputo name.