The bidding war for Warrnambool Cheese and Butter is unlike anything seen in Australia's merger and acquisition space for a number of years.
The fierce three-way tussle to win control of the strategic dairy assets in Victoria has divided the local community and thrust the city of Warrnambool onto the international stage. Despite a board endorsement of the A$9.20 per share offer from Canada's Saputo, the bidding war looks far from over, with Australia's Murray Goulburn Thursday upping its offer to A$9.50 per share.
Speaking this week in Mount Gambier, South Australia, the CEO of Warrnambool Cheese and Butter, David Lord told CNBC the board is "open to higher offers but certainty about completion is the reason why it has thrown its support behind the Canadian offer."
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Murray Goulburn's bid for Warrnambool Cheese and Butter would require approval from Australia's Competition regulator (ACCC), a process that could take three months to complete.
Meanwhile, Saputo, which has already won approval from Australia's new Treasurer Joe Hockey, is hoping its offer will be finalized by December 13th. It remains to be seen if Saputo will increase its bid for Warrnambool Cheese again.
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Lino Saputo Jnr, CEO and President of Saputo told CNBC this week that Saputo believes its offer "is compelling and offers a premium to the current value of Warrnambool shares, but it reserves the right to increase its offer."
He noted that Saputo has been eyeing Australian assets for more than a decade as it works to find a springboard to access the lucrative emerging markets.
"Australia is a strong platform to service the domestic diary market but also a platform for growing emerging markets, and we want to be participants in the industry," he added.
The bidding for one of the country's oldest dairy producers was sparked by an offer from Australia's Bega Cheese back in September but quickly escalated as Saputo and Murray Goulburn entered the fray.
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Following its endorsement of Saputo's offer, the Warrnambool board embarked on a roadshow with Saputo throughout parts of regional Australia to try and win over undecided shareholders and appease concerns over foreign investment into the dairy space.
David Lord, the CEO of Warrnambool Cheese told CNBC Saputo has given assurances jobs will not be lost if it's takeover succeeds. "Saputo don't have any operations in this country, so they need all of the existing staff that are employed by WCB so that's been reassuring to our suppliers as well as our employees." Lord says.
There are concerns a takeover by Murray Goulburn could result in job losses in the close knit community.
Warrnambool is located around 250 kilometers west of Melbourne and has a population of around 33,000. Many of its residents have connections to the dairy industry and don't want to see jobs lost as a result of the takeover. Thus, many locals have thrown their support behind Saputo's offer.
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Still, the race is not over yet. Following the latest bid from Murray Goulburn, it's likely that Saputo will, at the very least, match an offer from its rival, but the situation is complicated by Warrnambool's crowded share register.
Murray Goulburn and Bega Cheese are both significant shareholders in Warrnambool. They hold around 18% each in Warrnambool and are unlikely to sell their stakes to Saputo or any other bidder anytime soon.
Japan's Kirin – through its local unit Lion – also holds a 9.99 percent blocking stake in Warrnambool. Its intentions are unclear at this point.
This week Murray Goulburn and Bega Cheese applied to the Australian Takeover Panel to try and prevent Saputo from proceeding with its A$9.20 per share offer, claiming that Saputo has misled investors by upping its bid and removing the payment of a special dividend.
—By CNBC's Matthew Taylor. Follow him on Twitter @MattCNBC