dairy offer trumped

SUE MITCHELL AND STEVE HYNES
06 Feb, 2010 04:00 AM

http://www.standard.net.au/news/local/news/general/dairy-offer-trumped/1743889.aspx

MURRAY Goulburn Co-op is reviewing its takeover proposal for Warrnambool Cheese & Butter and plans to present an improved offer to the board in the coming weeks.

The move comes as it was revealed Murray Goulburn?s offer is not the highest bid on the table.

Murray Goulburn chief executive Stephen O?Rourke said the co-op was reviewing its original offer price, bid conditions and longer-term plans in an attempt to secure the support of the board, which last week rejected Murray Goulburn?s unsolicited approach.

?We?re in the process of having a look at that and seeing how we can revise it to hopefully get them to change their mind and engage with us,? Mr O?Rourke said.

?All elements of the proposal are being looked at ? there are a number of elements to this proposal that impact on shareholders, from the price right through to issues dealing with the farmers and the town itself and the region.

?All we?d like to do is try to engage with them and get the opportunity to explain in more detail why this makes sense.?

Mr O?Rourke said a merger of the two would generate significant scale and synergy benefits, enabling Murray Goulburn to deliver better returns to farmers through competitive farmgate milk prices and dividends.

The acquisition would double Murray Goulburn?s milk volumes in the western district of Victoria, from 900 million to 1.8 billion litres, allowing it to increase production of higher value-added dairy products such as cheese and butter.

?There is an opportunity to improve the bottom line and as a co-op these farmers would be back supplying a company that they 100 per cent own.

?The whole gambit of our proposal is being reviewed. We?d expect to make another proposition in the not too distant future.?

Murray Goulburn?s offer review may signal the start of a bidding war.

WCB chief executive John McLean told The Standard the $4 per share offer for the company was a revised bid from the undisclosed company that made the original offer of $3 per share on October 20.

Murray Goulburn tabled an offer on December 8. Mr McLean said confidentiality requirements prevented him from disclosing the price, but he confirmed that is was below $4 and in the region of $3.80.

On December 17 the original bidder, believed to be Canada?s Saputo, tabled a revised offer of $4 per share.

?WCB is not for sale but if it was we wouldn?t be looking at Murray Goulburn?s bid because it isn?t the highest on the table,? Mr McLean said.

He said when all the conditions of the Murray Goulburn offer were taken into account, the bid amounted to more like $3.30 per share.

?Neither of the offers reflects the trading position of WCB,? he said.