Canadian dairy giant, Saputo, has completed a takeover of Warrnambool Cheese and Butter (WCB).
Lion announced today that it had formally accepted an offer by Saputo Dairy Australia Pty Ltd to acquire all of the ordinary shares Lion held in WCB, at an improved price of $9.05 per share.
Lion said while it would make a small profit as a result of the sale, its stake had been a strategic one intended to protect the business’s broader interests, including long-standing contract arrangements with WCB.
Since the purchase of the WCB stake in 2013, Lion’s Dairy & Drinks business has made significant progress in its turnaround program, including the sale of everyday cheese assets to WCB in 2015 as part of its tightening focus on core dairy and juice categories.
"Today’s sale to Saputo is therefore a logical step and a positive outcome for Lion," it said.
"Existing contracts are unaffected by the sale, including Lion’s supply of parmesan cheese to WCB.
"Lion looks forward to continuing mutually beneficial commercial arrangements with WCB going forward."
Saputo announced the increased offer price yesterday for the shares it did not already own in WCB.
Releasing a final unconditional offer, Saputo Dairy Australia increased its cash bid from $8.85 a share to $9.05.
Saputo, which bought about 88 per cent of WCB after an intense four-way bidding struggle broke out in late 2013, has promised to pay any shareholders the $9.05 price within five business days if they have already accepted.
The new price is more than 25 per cent above the price WCB shares were fetching on the Australian Securities Exchange (ASX) before the latest Canadian takeover bid launch ($7.09), and above this week’s most recent ASX sale price of $9.02.
About 10 per cent of Warrnambool’s shares were held by Lion, which is owned by the Japanese beverage giant, Kirin.
Kirin bought into WCB during the bidding war three years ago, which began when Bega Cheese launched a takeover attempt and then saw its bid matched and raised by Saputo.
At that time Lion said it wanted to ensure it had a stake in the company responsible for manufacturing much of its cheese products on contract, including the Cracker Barrel and Coon brands.
Lion later sold its cheddar cheese brands to WCB in 2015.
Last year Saputo appeared ready to take control of WCB and delist the company when Warrnambool issued extra shares to its shareholders during a $142 million capital raising.
Saputo paid for its full entitlement of extra shares, however so did Lion, which lifted its blocking stake to slightly more than 10 per cent.
WCB is the fourth biggest dairy business in Australia.
Saputo is also the largest cheese maker and a leading milk and cream processor in Canada, one of the top three cheese businesses in the US and a major yoghurt producer, and the third largest dairy company in Argentina.