With the recommendation by Warrnambool Cheese & Butter board’s to its shareholders to approve a bid by Saputo to buy the local company at the front of their minds, the farmers want to know why foreign firms are getting preferential treatment, as they see it.
“We’ll be asking our political leaders why Canadian dairy giant Saputo was unconditionally and quickly cleared to bid for WCB,” said United Dairyfarmers of Victoria president Kerry Callow.
Federal treasurer Joe Hockey cleared Saputo’s foreign investment application on November 12, while Australian contender Murray Goulburn is yet to be cleared by the Australian Competition Tribunal.
A clear advantage
“As it stands Saputo, a foreign-owned company, has been given a clear advantage over a farmer-owned Australian bidder in the battle for WCB,” Callow said.
In assessing the bids last week, WCB’s board stated that while MG and Saputo are both offering WCB shareholders $9 a share the “Saputo offer is superior in terms of timing and execution certainty”.
It went on to warn: “the revised MG proposal is subject to numerous conditions, including no objection by the [Australian Competition and Consumer Commission] or the granting of authorisation by the Australian Competition Tribunal. Both the timing and outcome of the authorisation process are uncertain”.
The Competition Tribunal's decision on Murray Goulburn's bid will take a minimum of three months to assess.
Until recently, WCB was little known outside its home state, but now it is becoming the poster processor for the battle by Australians against a perceived foreign corporate invasion.
The company is now Australia’s second-biggest dairy exporter, making it a takeover target, especially as the market booms in response to growing Asian demand.
The UDV believes that the long term interests of the Victorian dairy industry are best served by keeping WCB in Australian hands.
“We are calling on WCB shareholders to recognise the merits of the two Australian companies currently in the bidding war—Bega Cheese and Murray Goulburn,” Callow continued.
“The UDV strongly supports the principle of Australian owned and operated manufacturers—where dairy farmers own the company and share in the profits along the way.
“We believe it is important for dairy farmers to have ongoing influence through the milk products’ supply chain.”
Dairy farmers are the major shareholders in the industry, owning about 90% of the farm-to-factory capital invested in Australian dairying.
“Let’s give our Australian-owned dairy companies the best possible chance to deliver our own profitable, globally competitive dairy industry. If we don’t take control of our destiny someone else will.”
While ultimately it’s up to WCB shareholders to determine which is the better offer for their company, the UDV’s line is that the decision should be made with all bidders competing on a level playing field.