Australian dairy processor Murray Goulburn Co-opertive Co (Murray Goulburn) has made a legal challenge to the latest bid for Victorian dairy company Warrnambool Cheese and Butter (WCB) from Canadian dairy company Saputo.

Murray Goulburn has made the legal challenge to Saputo’s bid through a submission to the Australian Government’s Takeovers Panel.

Details of the Murray Goulburn submission

Murray Goulburn has submitted (among other things) that the abandonment in Saputo’s most recent offer on 25 November 2013 of the special dividends proposal means that:

• Saputo will not vary its bid to conform with the previous announcements made by Saputo and WCB, contrary to s631(1) and truth in takeovers policy and

• WCB shares traded from 15 November 2013 to 25 November 2013 on the basis of misinformation as to the terms of the Saputo bid, namely that WCB shareholders would contingently receive franking credits of up to $0.56 per share.

In addition, Murray Goulburn submitted that the WCB Board should advise shareholders to wait until the bid is in its final stages, or bidders have declared their bids final; and WCB should release the bid implementation agreement between WCB and Saputo to the market, in line with market practice.

Murray Goulburn is seeking interim orders, including that Saputo be restrained from processing acceptances and acquiring WCB shares on market. Murray Goulburn is seeking final orders, including that WCB reinstates the previously proposed special dividends (but with the record date for each dividend falling after declaration of that dividend), Saputo be restrained from varying its bid to provide for the conditional payment of the additional $0.20 per share and further disclosure.

The Takeovers Panel has confirmed that it has received an application from Murray Goulburn, but said that a sitting Panel has not yet been appointed that that no decision has been made whether to conduct proceedings.

Background

WCB is currently the subject of competing takeover proposals from Saputo, Bega Cheese and Murray Goulburn. WCB has recommended Saputo’s most recent bid to its shareholders.

On 15 November, Saputo and WCB announced an increase in the consideration under the Saputo bid to $9 per WCB share and a proposed intention by WCB to declare the following fully franked special dividends:

• $0.46 per share, subject to Saputo obtaining a relevant interest in at least 50.1 per cent of WCB shares and

• a further $0.85 per share, subject to Saputo obtaining a relevant interest in at least 90 per cent of WCB shares.

WCB’s announcement disclosed that WCB shareholders “who can capture the full benefit of the franking credits associated with both Permitted Dividends would receive an additional benefit under the Revised Saputo Offer valued at $0.56 per share”.

On 25 November 2013, Saputo’s bid was declared unconditional; and WCB and Saputo announced (among other things) that the special dividends would no longer be declared by WCB and the consideration under the Saputo bid would be $9 per share with an addition $0.20 cash per share if Saputo obtained a relevant interest in WCB of greater than 50 per cent during the offer period.

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