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Bega extends offer for Australia's Warrnambool

Monday, 25 Nov 2013 | 10:46 PM ET

SYDNEY, Nov 26 (Reuters) - Bega Cheese Ltd said on Tuesday it is extending its offer for Australia's Warrnambool Cheese and Butter Factory Co by two weeks as it struggles to remain in the takeover race.

Bega and rival bidder Murray Goulburn Co-operative Ltd are considering taking the battle for Warrnambool to the Takeover Panel in the wake of a revised bid by Saputo Inc.

Saputo declared its A$505 million ($463 million) bid for Warrnambool unconditional on Monday and said it would hike its offer if it won control of Australia's oldest dairy maker.

But Canada's largest dairy company is still a long way short of success, revealing on Tuesday it holds just 3.7 percent of Warrnambool.

Bega and Murray Goulburn hold around 18 percent each, with Kirin Holdings Co Ltd's Australian food and beverage business Lion holding around 10 percent.

Saputo's simplified offer removes conditions associated with dividends payable by Warrnambool, which is backing the offer.

Bega and Murray Goulburn argue the decision to drop A$1.31 per share in proposed dividends means that shareholders will not have access to A$0.56 in franking credits. On that basis, the value of the bid has fallen from A$9.56 to A$9.20 if 50 percent acceptance is achieved, they said.

Saputo said it has followed takeover guidelines.

Bega is extending its offer to Dec. 12, the day before Saputo's deadline.

Both Saputo and Murray Goulburn are this week holding public meetings in the Victorian agricultural towns where Warrnambool is based and where farmer suppliers and shareholders are key to the deal.

Murray Goulburn's A$9 per share bid is hamstrung because it needs regulatory approval from the Australian Competition and Consumer Commission (ACCC), meaning it cannot make an unconditional offer.

In 2010, Murray Goulburn dropped a A$180 million bid for Warrnambool after the ACCC expressed concerns about reduced competition for milk supplies.

Bega already has ACCC approval for its final offer of A$2 cash and 1.5 Bega shares per Warrnambool share, currently valued at around A$9 per share.

Shares in Warrnambool have more than doubled since Bega launched an initial approach in September. They were up 0.3 percent at A$9.26 on Tuesday.

($1 = 1.0914 Australian dollars)

(Reporting by Jane Wardell; Editing by Stephen Coates)