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A fourth bidder for Warrnambool Cheese & Butter?

The battle for control of Warrnambool Cheese & Butter (ASX: WCB) has taken another turn, with a mystery buyer picking up a big parcel of shares in the last two days.

Warrnambool has already fielded offers from existing majority shareholders Bega Cheese (ASX: BGA) and Murray Goulburn, as well as Canadian dairy company Saputo Inc. In a statement to the ASX, Warrnambool says it doesn’t know who picked up the shares, with more than 3.2 million or 5.7% of the company’s shares changing hands by midday Tuesday.

According to the Australian Financial Review (AFR), food and beverage company Lion, which owns brands including Berri, Dairy Farmers, Coon and PURA, may be the most likely buyer. But it appears the buying is to stop Warrnambool becoming part of a larger organisation.

The AFR reports that broker RBS Morgans was in the market for a strategic buyer, a client who wants the dairy company to remain an independent listed company. Warrnambool boss David Lord has told the AFR, “A clear motive doesn’t stand out from any of our customers or JV Partners. The news broke for us while we were having a supplier meeting in Timboon. One of our suppliers broke the news from the floor during question and answer time.”

The other rumoured buyer could be New Zealand dairy giant Fonterra (ASX: FSF), which may also be looking to build a blocking stake. Both Lion and Fonterra may fear that a combined Bega and Warrnambool may prove too much of threat to their business, should Bega lift its bid.

Warrnambool has currently recommended Saputo’s bid of $8 per share in cash, but RBS Morgans has been seeking to buy shares for up to $9.25 each. The dairy company’s shares are currently trading well above the last offer price at $8.91, but at one stage hit a record high of $9.30.

Foolish takeaway

Since Bega announced its takeover offer, shares in Warrnambool have more than doubled. They could go higher still, but if none of the takeovers proceed, Warrnambool shareholders could see their shares halve in price.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

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