Jurisdiction - Australia
Australia – Canadian Dairy Giant Wins Bidding War For Oldest Dairy Producer.

23 April, 2014



The re-shaping of the Australian dairy sector continued with the dramatic arrival of Saputo, the winner of the hotly contested takeover battle for Australia’s oldest dairy producer, Warrnambool Cheese & Butter. The bidding war between Saputo, Bega Cheese and Murray Goulburn raged from October 2013 to February 2014 and pushed the value of Warrnambool shares from AUD 4.51 (the price prior to the initial offer from Bega) to AUD 9.40 (Saputo’s final offer). 

As a foreign person proposing to acquire an interest of 15 per cent or more in an Australian business valued above AUD 248m, Saputo was required to notify and obtain the prior approval of the Federal Treasurer as part of the process from making its offer. The Treasurer is required to review such applications to determine if they are ‘contrary to the national interest’. In making this determination the Treasurer will almost invariably rely on advice from the Foreign Investment Review Board (‘FIRB‘) but the Treasurer has the power to apply conditions to the way proposals are implemented or even block them outright. On 12 November 2013, Saputo received approval without conditions which provided it a clear path to progress its offer. However, interestingly, the much debated decision of the Treasurer to block the proposed acquisition of GrainCorp by American global food-processing and commodities-trading corporation Archer Daniels Midland followed a short time after Saputo’s decision and is proof that approval is not a mere formality.


While Bega and Murray Goulburn eventually sold their significant shareholdings in Warrnambool into Saputo’s attractive bid, Lion decided to hold onto its 10% stake (which it purchased during the bidding period), thereby preventing Saputo from acquiring 100% of Warrnambool. Lion’s motives are unclear but presumably relate to protecting its supply arrangements with Warrnambool. 

And Saputo has another problem. The takeover battle – which is being referred to as the ‘cheese wars’ – has resulted in Saputo paying a high price for Warrnambool and, unlike Murray Goulburn and Bega, Saputo cannot realise costs savings by rationalising Warrnambool’s operations with existing operations.


As international demand for Australian dairy products grows, all eyes are on Murray Goulburn, Saputo, Lion and Bega for the next move in the great milk shake-up.


herbert smith Freehills


For further information, please contact:


James Robinson, Partner, Herbert Smith Freehills 
[email protected]

Graeme Preston, Partner, Herbert Smith Freehills 
[email protected]

Richard Loveridge, Partner, Herbert Smith Freehills 
[email protected]


Joseph Fisher, Herbert Smith Freehills
[email protected] 

Herbert Smith Freehills Competition & Antitrust Practice Profile in Australia


Homegrown Competition & Antitrust Law Firms in Australia


International Competition & Antitrust Law Firms in Australia


Comments are closed.