Warrnambool Cheese and Butter shareholders in box seat as Aussies strike back in dairy wars SO, THE empire strikes back and Australia has gained the upper hand in the fight for ownership of Warrnambool Cheese & Butter Factory - for now. Murray Goulburn's $9 a share offer for the dairy group comprehensively trumps the $8 a share bid by Canadian group Saputo, which the Warrnambool board has supported and Treasurer Joe Hockey has now cleared. It is designed to be a knockout bid but so have all of the others before it by Bega and Saputo as the value of Warrnambool has skyrocketed from just under $200 million early this year to a staggering $503 million if this bid is realised. There are sticking points to Murray Goulburn's bid, the most obvious being whether the Australian Competition and Consumer Commission becomes involved or the Australian Competition Tribunal gives the deal the green light. A takeover by Murray Goulburn would reduce the number of major milk buyers in parts of Victoria and South Australia from three to two, which will be the major competition problem, although Murray Goulburn has been draping itself in the Australian flag to counter this issue. Murray Goulburn's co-operative structure is another advantage it is trumpeting loudly as chief executive Gary Helou stresses that dairy farmers needs will remain paramount to the merged group, with its aim to increase farm gate prices for whole milk. It will be fascinating to watch the machinations from here on with the Warrnambool board's steady allegiance to Saputo's deep pockets now dependent on the Canadian giant coming back with a still higher offer. Saputo still faces roadblocks in the form of a blocking stake held by Murray Goulburn, Bega and Kirin's Lion, although making its offer unconditional would allow it to build a decent stake if the price is right. Bega will probably find it difficult to justify or fund a higher offer, although it has the advantage of no competition concerns and a share market listing that allows investors to retain exposure to the industry. All of the players are now valuing Warrnambool on its strategic rather than intrinsic value and none of them is going to let go of their shares or ambitions without putting up a really big fight. Which leaves independent Warrnambool shareholders in the box seat as they see the value of their holdings soar as the bidders envision their company as a springboard into the fast growing Asian dairy market.