Murray Goulburn, an Australian diary co-operative, has launched a A$420m ($404m) bid to acquire Warrnambool Cheese and Butter (WCB), following Canada's Saputo C$378m bid earlier this month.
The proposal would create one of the largest Australian owned food and beverage businesses and a globally competitive dairy company controlled by farmers.
The combined business is expected to have milk supply of more than four billion liters in 2014 with annual revenues in excess of $3.2bn, placing it among the top 20 global dairy producers.
Under the terms, Murray Goulburn made an off-market offer of A$7.5, beating Saputo's A$7. It plans to pay for the transaction through additional debt facilities from National Australia Bank (NAB), Australia and New Zealand Banking (ANZ) and Westpac Banking (WBC).
Lazard is acting as financial adviser to Murray Goulburn, while Herbert Smith Freehills is providing legal counsel.
The proposal is a part of Murray Goulburn's strategy to consolidate the struggling dairy sector.
Murray Goulburn chairman Philip Tracy said this is an historic opportunity for Murray Goulburn and WCB suppliers and shareholders to create a larger scale, globally competitive Australian dairy food company owned and controlled by Australian dairy farmers.
"Importantly, it will retain the primary objectives of a co-operative in maximising farm gate returns for farmer owners," Tracy added.
"It will also support on-farm and industry investment, and in turn grow the Australian dairy industry for the benefit of regional communities."
If a deal is set, Murray Goulburn intends to seek shareholder approval to rename the combined business 'Murray Goulburn Warrnambool.'
Image: The proposal is a part of Murray Goulburn's strategy to consolidate the struggling dairy sector. Photo courtesy of Suat Eman.
