Japanese-owned dairy and brewing giant, Lion, has sold its 10 per cent stake in Warrnambool Cheese and Butter, effectively ending a three year takeover bid by Canada’s Saputo Incorporated dairy business.
Lion has formally accepted Saputo Dairy Australia’s offer to acquire all of the ordinary shares Lion holds in WCB, at this week’s improved price of $9.05 a share.
It originally bought a 9.99pc stake for $9.30 a share in late October 2013 after Bega Cheese had made an initial tilt at WCB, sparking a surprise counter bid by the Canadians.
Saputo has confirmed it has received acceptances for just over 8 million shares worth about $75 million and has subsequently lifted its majority stake in WCB to 98.4pc.
While Lion says it will make a small profit as a result of the sale, its blocking stake in WCB, acquired at the height of the 2013-14 four-way battle for the big cheesemaker, was a “strategic one aimed at protecting Lion’s business’ broader interests”.
Lion had longstanding contract block cheese production arrangements with WCB.
The company said since buying its WCB stake in 2013 the Lion Dairy and Drinks business had made significant progress in its turnaround program, also selling its everyday cheese assets to WCB in 2015 in a move to tighten its focus on core dairy and juice categories.
The share sale to Saputo was considered a “logical step and a positive outcome for Lion”.
Continuing contracts, including Lion’s supply of parmesan cheese to WCB, would not be affected by the sale.
In a statement Lion said it looked forward to continuing mutually beneficial commercial arrangements with WCB.
The share sale means Saputo will now begin compulsorily acquiring all Warrnambool shares not already offered to the company.
Saputo will wrap up its compulsory purchase offer by March 7, paying the full $9.05/share price.