Global plans for Warrnambool Cheese & Butter

Canadian dairy giant, Saputo, has lofty plans for its takeover target, Warrnambool Cheese & Butter (ASX: WCB).

Saputo CEO Lino Saputo jnr, has also told investors and shareholders that he was impressed with Warrnambool’s existing management and would be happy for current CEO David Lord to stay on to manage Saputo’s Australian dairy business.

But both statements may be for the benefit of the farmers who supply Warrnambool with milk, as well as holding an estimated 40% of the shares, and the board and management of Warrnambool, in an effort to persuade them to support Saputo’s bid Warrnambool.

Bega Cheese (ASX: BGA) and Co-operative Murray-Goulburn, both substantial shareholders in Warrnambool have tendered separate offers for the dairy company, and it appears the time to woo Warrnambool shareholders has arrived.

Mr Saputo jnr also told analysts over the weekend that Warrnambool would not just be a platform to sell dairy products into China, but as one leg of a strategy to sell dairy products into all emerging markets. Saputo is working on a number of acquisitions presently, and wants to be able to offer its customers dairy products such as cheese and milk powders from any of the United States, Argentina or Australia.

Saputo is the current highest bidder for Warrnambool, with an $8.00 cash per share offer on the table, but there’s no certainty that its bid will be the final and winning bid. Media reports suggest Bega is considering upping its offer of $2 cash and 1.2 Bega shares for each Warrnambool share, while Murray-Goulburn’s $7.50 cash bid has drawn some concerns from the Australian Competition and Consumer Commission (ACCC).

Further complicating the issue is New Zealand dairy giant Fonterra’s (ASX: FSF) decision to take a stake in Bega Cheese, and Lion buying a 10% blocking stake in Warrnambool.

Foolish takeaway

All three bidders will be trying to woo Warrnambool shareholders and management to support their bid against their rivals. This was likely Saputo’s first shot, but probably not its last.

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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