Ann: Saputo Announces Takeover Offer for WCB, page-7

Some reasons why shareholders should hold out for much more money:

1. Saputo bought most of its shares at $9.40ps in its almost successful takeover bid a few years back. At the time, they said that they were willing to pay $9.60ps if they got over 90%.

2. Since then, the broader market has risen substantially despite paying out dividends.

3. WCB has retained every cent of earnings (so the SP rise should be higher than the market rise because the capital base is expanding more than if dividends had been paid).

4. Australia has signed a FTA with China, so the LT outlook for the local dairy industry is much better than it was at the time of Saputo's $9.40 bid.

5. Trump is probably going to start a trade war, which will result in tariffs being slapped onto US cheese, making Australian cheese even more profitable.

6. WCB has been operationally very successful under Saputo, so it should have outperformed the broader market.

$12-$13 is what I'd consider a conservatively fair price for this business, although I'd be prepared to let it go cheaper if the cash was forthcoming sooner rather than later and franking credits were thrown into the takeover consideration.