Saputo wins bidding battle for Warrnambool Cheese and Butter Bega Cheese has formally left the $500-million-plus race for Warrnambool. Canadian dairy major Saputo appears to have emerged as the winner in the fight to control Australia's oldest listed milk processor, Warrnambool Cheese and Butter. Bega Cheese has formally left the $500-million-plus race for Warrnambool, outlining plans to sell its 18.8 per cent stake to Saputo. This will catapult the Montreal-based company's holding to more than 45 per cent, making it the single biggest shareholder. Bega's decision has left Saputo's rival, Australia's Murray Goulburn, considering the future of its bid and 17.5 per cent stake in Warrnambool. Murray Goulburn's options include selling to Saputo and securing a near $95 million windfall for its holding. Saputo has promised to pay $9.60 a share for WCB if it secures 90 per cent. The farmer-owned Murray Goulburn could use that profit to cut its debt and invest further in its milk processing operations, which include a factory in Koroit, about 30kilometres from Warrnambool's Allansford plant in south-west Victoria. In a letter to staff, Murray Goulburn managing director Gary Helou said he would keep them "fully informed as the situation unfolds." Murray Goulburn had offered $9.50 cash a share, or $533 million, but that hinged on acquiring at least 50 per cent of WCB and gaining approval from the Australian Competition Tribunal, which is set to make a decision by February 28. Saputo's adviser, Sam Prentice of Rothschild, declined to comment on rising speculation that Murray Goulburn would sell its stake, saying only: "We're obviously very pleased that Bega has announced it will sell into Saputo's offer and expect many other shareholders will follow Bega's lead." Analysts said it would be pointless for Murray Goulburn to keep its stake and potentially frustrate a full buyout by Saputo. Japanese food conglomerate Kirin is set to play a key part in determining the future for WCB, given that it holds a potentially decisive 10 per cent stake of the takeover target through its subsidiary Lion. A Lion spokeswoman declined to comment on the future of the holding, which Lion bought in October to protect its supply agreement with WCB for its cheese brands Coon and Cracker Barrel. Saputo chief executive and vice-chairman Lino Saputo jnr - who had hoped to finalise the deal before Christmas - drew a line in the sand last Friday when he extended Saputo's offer by 10 days to January 22. He told WCB shareholders there would be no more extensions and the offer was final. Saputo's acceptances jumped from 21 per cent to more than 26 per cent over the weekend as a result. Bega's board met early on Thursday to discuss what its executive chairman Barry Irvin said was a "difficult decision." Indeed, it was Bega that ignited the bidding war in mid-September, offering shares and cash which at the time was equivalent to $5.78. It later sweetened its offer, which peaked at a little over $9 per Warrnambool share, but folded on December 20, with its stake increasing by only 0.5 per cent. Mr Irvin said while Bega's board would have liked to see WCB, Australia's oldest listed milk processor, stay within Australian control, it would have been "irresponsible" not to accept Saputo's offer. The NSW-based company will book a profit on the sale of as much as $68 million. "In the end we had to look at the reality of the facts on the table," Mr Irvin told BusinessDay. We were looking at a substantial profit and a substantial amount of revenue from our Warrnambool stake that was guaranteed with the Saputo bid. Taking a risk with that level of capital was not something we thought we could responsibly do. Despite Bega telling the competition tribunal that it believed a Murray Goulburn-Warrnambool merger would not hinder competition for raw milk, Mr Irvin said the tribunal's decision was far from certain. There had been timing advantages occurring right throughout this bidding process. At this particular stage in the process, Saputo clearly had a timing advantage over Murray Goulburn and they used that advantage. Saputo has offered $9 cash a share, which rises to $9.20 if it acquires 50 per cent, $9.40 at 75 per cent and $9.60 at 90 per cent.