Loss is gain for MG
MURRAY Goulburn announced last Thursday that as a result of Saputo acquiring a controlling interest in Warrnambool Cheese and Butter, it will withdraw its bid to take over WCB.
MG also intends to accept Saputo’s offer.
In accepting into the Saputo offer, MG will receive at least $92.9 million of cash proceeds, which will result in a gain on investment before tax and costs of around $51 million.
MG will now move to seek the consent of the Australian Securities and Investments Commission to withdraw its bid for WCB and has withdrawn its authorisation application to the Australian Competition Tribunal (ACT).
Commenting on the decision to accept into the Saputo offer, MG’s managing director Gary Helou said, “The sale of our WCB shareholding represents an excellent financial outcome for our co-operative.
“These cash proceeds will support our plans to reinvest in our business and to grow market share in Australia and expanding internationally, further assisting us to deliver our goal of increasing the underlying farmgate returns.
“Throughout this process MG remained committed to acquiring WCB and we were confident we had a compelling case to obtain authorisation from the ACT.”
Mr Helous said in light of Saputo acquiring a controlling interest in WCB, MG has an obligation to the cooperative shareholders to maximise the financial outcome and focus management time on growing a strong and globally competitive company.
“Accordingly we have notified the ACT we intend to cease our application from this point,” he said.
“While we are disappointed to have missed out on the opportunity to acquire WCB, we are pleased our involvement in the bidding process drove a genuine auction and all WCB shareholders have benefited as a result, including MG’s 17.7 per cent stake.”
Fish Creek Murray Goulburn supplier Paul Hannigan said it seems ridiculous a foreign company was given the go ahead over a local company.
“It would have been good (if MG were successful) to keep it in Australian hands and increase the size and efficiency of the company, but it isn’t the end of the world,” he said.
Mr Hannigan isn’t convinced a new player in the dairy industry will impact on farm gate prices, at least in the short term.
“I don’t see they will pay more than they will have to. The other dairy companies already acknowledge they set their price by MG, so I don’t think Saputo will be any different,” he said.
“I can’t picture it making a lot of difference to us.”
The United Dairyfarmers of Victoria (UDV) said its preferred position was for WCB to remain an Australian owned company.
“However, we respect WCB shareholders have determined which was the better offer available,” UDV president Kerry Callow said.
“We understand shareholders have had a difficult decision to make and we respect the decision they have made.”
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