Saputo to Acquire Warrnambool Cheese and Butter

9 Oct 2013 --- Saputo Inc. has agreed with Warrnambool Cheese and Butter Factory Company Holdings Limited to make an all cash takeover offer of AU$7.00 per share for all the shares in Warrnambool on issue at the end of the offer period.

The Offer has been unanimously recommended by the Board of Warrnambool and all Warrnambool directors recommend that Warrnambool shareholders accept the Offer, in the absence of a superior proposal. Each Warrnambool director and executive intends to accept the Offer for all of the Warrnambool shares they hold or otherwise control, in the absence of a superior proposal.

Warrnambool is an Australian public company, listed on the Australian Securities Exchange ("ASX"). Warrnambool is one of the largest milk processors in Australia, operating two manufacturing sites in South West Victoria and South Australia and employing over 420 people. Warrnambool produces a range of dairy products for domestic and export markets. Its products include cheese, butter and butter blends, milk, cream and dairy ingredients. For the financial years ended June 30, 2013 and 2012, Warrnambool's consolidated revenues were CA$477 million1 and CA$479 million, respectively, with earnings before interest, tax, depreciation and amortisation (EBITDA) of CA$25 million and CA$34 million, respectively. As publicly disclosed by Warrnambool on October 2, 2013, EBITDA for the financial year ending June 30, 2014 is expected to be in the range of CA$45 million to CA$50 million2.

Based on the current issued share capital of Warrnambool, the purchase price for 100% of the shares of Warrnambool would equal approximately CA$378 million and will be funded out of Saputo's newly committed bank loan with a three-year term. The enterprise value of Warrnambool implied by the Offer is approximately CA$450 million, based on CA$73 million of net debt as of June 30, 2013. Depending upon Saputo reaching specified interest thresholds in Warrnambool, a portion of the offer price of up to AU$1.31 per share may be payable by Warrnambool through the distribution of special dividends to its shareholders that could deliver additional value estimated by Warrnambool to be up to an additional AU$0.56 per share to some Warrnambool shareholders, depending upon the individual tax circumstances of each Warrnambool shareholder.

The Offer is subject to a limited number of conditions (including foreign investment approval and a minimum tender condition of greater than 50%). The Offer is expected to close around early December 2013, unless extended or changed as permitted by the Australian Corporations Act. There can be no assurance that the Offer will be successful, either in whole or in part. Warrnambool is also the subject of a non-solicited takeover offer launched by an Australian dairy company on September 12, 2013, which offer includes a consideration of cash and shares at an implied offer price of AU$6.30 per Warrnambool share, calculated on the Australian bidder's share price as at the close of trading on ASX on October 7, 2013.

Rabobank and Rothschild are acting as the financial advisors to Saputo, while Maddocks and Stikeman Elliott LLP are acting as legal counsel. National Bank of Canada and Bank of Montreal are co-lead arrangers for the new bank loan.