WCB Board recommends Saputo offer

Following an offer of $7 cash per share, Warrnambool Cheese and Butter (WCB) has entered into a Bid Implementation Deed with Canadian company Saputo. The WCB Board has unanimously recommended that shareholders accept Saputo’s offer.

Highlights of Saputo’s offer include:

• A recommended offer of $7.00 cash per WCB share, valuing WCB at $392.7 million on a fully diluted basis.
• Saputo’s offer gives WCB the discretion to pay fully franked special dividends of up to $1.31 per share in aggregate. Any special dividends would be deducted from the offer price of $7.00 cash per share payable by Saputo.
• If either or both special dividends are paid, some WCB shareholders may also derive additional value above $7.00 from the franking credits attached to those special dividends. The value from these franking credits will be up to $0.56 per share for some WCB shareholders if both special dividends are paid.
• Saputo has made strong commitments to WCB suppliers, employees and the retention of WCB’s corporate identity and brands.

The WCB Board says Saputo’s offer is superior to Bega’s offer in terms of value and conditionality.

“The Board has carefully considered Saputo’s offer and has decided to unanimously recommend that WCB shareholders accept Saputo’s offer, in the absence of a superior proposal,” said CEO and Managing Director of WCB David Lord.

“Saputo’s offer underscores the strategic value of WCB’s assets and vindicates the Board’s decision to reject Bega’s inadequate, highly conditional offer. Saputo’s all cash offer provides greater certainty for WCB shareholders and a substantial premium for their WCB shares.”

“As well as the premium offered to WCB shareholders, Saputo’s commitments to WCB suppliers, customers and employees were critical factors in the Board’s decision to recommend Saputo’s offer, in the absence of a superior proposal,” said WCB Chairman Terry Richardson.

“We believe Saputo has recognised WCB’s 125 year long history and how critical our staff and suppliers are to the growth and success of our company and WCB’s importance to the local community more broadly.

“Saputo does not have any current activities in Australia and has advised WCB that it does not intend to rationalise or redeploy any of WCB’s fixed assets. In fact, Saputo has advised WCB that it would be looking to invest further to expand WCB’s operations by increasing existing capacity or building additional capacity.”

The expected closing date of the offer is early December 2013. A full report of Saputo’s offer is available here.