WARRNAMBOOL Cheese and Butter (WCB) shareholders have today been sent conflicting messages by WCB and Murray Goulburn.
WCB has urged its shareholders to unanimously reject Murray Goulburn's takeover bid for the company, while Murray Goulburn has asked WCB shareholders to wait for an outcome from the Australian Competition Tribunal over its proposed acquisition.
WCB's key message to shareholders was contained in its target's statement released to the ASX today in response to Murray Goulburn's (MG) takeover offer of $9.50 cash per WCB share.
WCB chairman Terry Richardson said in a letter to shareholders there were three key reasons WCB directors recommended shareholders unanimously reject MG's offer.
He said the revised offer made by Canada's Saputo on December 17 is considered superior to MG's offer, based on "overall comparative assessment of value, certainty and timing".
WCB says MG's offer is "highly conditional and uncertain" and MG's intentions regarding the future of WCB's operations "are unclear in a number of material respects".
However, MG has today urged WCB shareholders to wait for the outcome of the Australian Competition Tribunal process to "properly assess the competing takeover bids for WCB".
MG released its third supplementary bidder's statement to the ASX today.
MG says its bid for WCB of $9.50/share is the highest bid, and that it considers it has a "compelling case" to obtain authorisation from the Australian Competition Tribunal for its acquisition of WCB to proceed.
MG lodged its authorisation application in November 2013. The Tribunal is expected to hold a five-day hearing from February 10, with a decision possibly by the end of February.
MG managing director Gary Helou said MG urged WCB shareholders to not rush their decision to sell their WCB shares.
"WCB shareholders should wait until the merger authorisation application process has been determined so that Murray Goulburn's offer can be considered on its merits," Mr Helou said in a statement.
"Murray Goulburn remains committed to acquiring WCB and believes the combination of WCB and Murray Goulburn will deliver an Australian owned and operated globally competitive dairy company."
Due to the overlap between MG's and WCB's businesses and because they operate in similar geographic regions, MG applied to the Tribunal for authorisation to allow the acquisition to proceed.
MG's application to the Tribunal sets out details of public benefits it expects from the proposed acquisition, including international competitiveness in Australia's dairy industry and a substantial increase to the milk pool and efficiencies.
MG also argues there will be many flow-on benefits to farmers and rural communities, including higher farmgate milk prices.
"The opportunities for increased production of raw milk (stimulated by higher prices for raw milk) and higher production of exports and increased production of higher margin products may result in a significant increase in dairy farming and dairy processing economic activity," MG says.
As previously reported by FarmOnline, Saputo lifted its bid price for WCB on December 17.
Saputo's base price is $9 cash for each WCB share, but will increase its offer price by 20 cents to $9.20 if it secures 50pc of the Warrnambool share register.
If Saputo obtains a relevant interest in WCB shares of that exceeds 75pc during the final offer period, which expires on January 10, it will lift its payments to $9.40/share.
If Saputo gets more than 90pc response to its offer, the price rises again by another 20c to $9.60.
WCB shares were trading at $9.23/share at 10am AEDT this morning.