Warrnambool Cheese and Butter Factory pours more cold water on takeover bid

Posted by Daniel Palmer on 9th December 2009

Warrnambool Cheese and Butter Factory has reiterated their lack of interest in the current takeover offer before them as rumours swirl as to the identity of the mystery bidder.

The company received an unsolicited approach recently that was quickly dismissed by the Board, although not disclosed to the market until a “speeding ticket” was issued by the ASX yesterday.

Who can it be now?

Since the announcement practically every dairy company who has an interest in the Australian dairy industry or has had an interest – or perhaps simply had an employee who once went on holiday down under – has been linked to the bid.

Of what would typically be considered the main contenders it appears that Lion Nathan National Foods can be ruled out due to the recent purchases of parent Kirin Holdings. Fonterra and Murray-Goulburn, two other major players in the sector, have been discussed but appear unlikely candidates.

As for other possible bidders, Bega Cheese has been mentioned along with the two unsuccessful bidders for Dairy Farmers last year – Canadian-based Saputo and Italian-owned Parmalat. While the Sydney Morning Herald has listed CHAMP Private Equity as the frontrunner, the owner of Manassen Foods. They recently sold United Malt Holdings to Australian grain processor Graincorp in October and would likely have the funds to make an offer. However, the source of the rumour was not disclosed.

WCB interest not even lukewarm

Warrnambool Cheese and Butter Factory Chairman Frank Davis advised that the current offer was not in the ballpark as to what they consider to be acceptable.

“We think (the offer) is way short of anything that we would even consider as a board and we have rejected it,” he told The Standard. “Boards have a legal obligation to consider proposals that might maximise shareholder value but as you might well imagine our board is not about to consider anything that isn’t absolutely gold-plated.”

“The other party probably doesn’t think the door is closed. We think it’s pretty closed. Our shareholders have a very unique bond to the company and would be very, very loathe to sell to anybody.”

The lack of Board interest is likely to see the bid come to nothing with an unusual clause in the company’s constitution making it difficult, though not impossible, for a hostile bid to succeed.

WCB shares have continued to soar today and are up by around 35 per cent this week.