Canada's Saputo taking over Aussie dairy firm
SYDNEY: Canada's Saputo Inc swooped on Warrnambool Cheese and Butter Factory Co Holdings Ltd, potentially kick-starting a wave of foreign purchases in Australia's A$4 billion (RM12 billion) a year dairy industry.
Canada's largest dairy producer knocked out a significantly lower bid from Warrnambool's majority shareholder, fellow Australian company Bega Cheese Ltd, to win approval from the board for its A$392.7 million bid.
Australian dairy farmers have been battered in recent years by a powerful combination of factors, including a supermarket price war that slashed domestic wholesale prices, a strong Australian dollar that crimped exports and a drought that sent cattle feed costs soaring.
While there are bright spots on the horizon - the Australian dollar is falling, demand from the Asian middle class is rising - many local dairy farmers probably won't be able to hang on for the good years in the face of well-funded foreign predators.
"We've got significant enquiries... from both major local producers as well as offshore investors looking for exposure to Australian agriculture," said Jesse Manuel, a rural and agribusiness specialist at Colliers International.
"Those investors are predominantly from Asia, including Singapore and China, also New Zealand."
Saputo, which operates in Canada, the United States and Argentina, has long been looking at Australia as a platform to expand its global presence and tap growing demand in Asia's emerging markets.
"We believe Australia has the ideal platform for us getting products into those emerging markets," said its chief executive officer Lino A. Saputo Jr at a media briefing.
Saputo made an off-market offer of A$7 per share for Warrnambool in an all-cash deal, which the Warrnambool board had recommended shareholders to accept. That was well above a A$5.75 per share offer from majority owner Bega Cheese Ltd last month. Reuters