Gary Helou has a cheerleader and it is not anyone in the Murray Goulburn Co-operative Ltd extended family. David Williams, the Kidder Williams Ltd investment banker advising Bega Cheese Ltd, supports the attempt by Helou, managing director of Murray Goulburn, to elicit help from Canberra policy makers so Warrnambool Cheese and Butter Factory Ltd is not acquired by Canada’s Saputo Inc.
“I do agree with Murray Goulburn that Canberra should intervene to ensure a level playing field for the Australian bidders on the issue of competition policy,” Williams told DataRoom.
Saputo’s market value is C$9.4 billion and it has $888.6 million left on its credit lines, courtesy of the Bank of Montreal and the National Bank of Canada. The Montreal-based company’s financial fire power far surpasses Murray Goulburn or Bega’s as the three rival bidders battle to secure Warrnambool.
Helou says Australia needs a national dairy champion along the lines of New Zealand’s Fonterra, adding the local dairy industry needs to consolidate.
“It’s about scale,” Helou told DataRoom. “Australia has nine processors and none of us have scale. We’ve not invested at the same rate and scale as dairy producers in Europe or New Zealand. To be relevant on the global market we need to have the milk-supply capability.”
If Murray Goulburn acquires Warrnambool it will have an annual milk supply of about 4 billion litres, putting it among the top 20 dairy producers in the world.
“An agricultural business in a small market like Australia needs to be allowed to build scale onshore to become relevant offshore,” says Helou.
He says Murray Goulburn will tomorrow makes its submission to the Australian Competition Tribunal that will detail its rationale to acquire Warrnambool. Helou expects that process to take as long as three months but has no idea how long it will take for the tribunal to make a decision.
“We are very serious about” acquiring Warrnambool, says Helou, in reference to his cooperative’s latest $9.50 cash per share takeover offer - the highest among three bidders.
Saputo’s offer is as much as $9.20 per share if it acquires more than 50 per cent of Warrnambool. Bega’s takeover offer, 1.5 of its shares plus $2 cash, as of 1458 AEST is valued at $9.0725. Warrnambool’s share price was $9.32