MONTREAL — Saputo Inc. shares are trading at their highest price in six months following news of a $1.29-billion agreement to acquire Australia's Murray Goulburn Co-Operative Co.
The friendly takeover would be Saputo's biggest Australian acquisition since 2014, when it bought Warrnambool Cheese and Butter Factory after a months-long bidding battle.
Saputo said Thursday after markets closed that the Murray Goulburn deal reinforces its commitment to strengthen its presence in the Australian market.
The Montreal-based cheese and dairy company's stock (TSX:SAP) was at $46.61 shortly after the Toronto Stock Exchange opened, up $1.70 or about four per cent from Thursday's close before the deal was announced.
Saputo's stock hasn't been above $46 since April and had fallen to a 2017 low close of $39.95 in July.
Murray Goulburn makes a variety of dairy products including milk, milk powder, cheese, butter and infant formula.
"By acquiring a well-established industry player, (Saputo) reinforces its commitment to strengthen its presence in the Australian market," the company said in announcing the deal Thursday.
"Saputo intends to continue to invest in its Australian platform and contribute to the ongoing development of its domestic and international business."
Saputo said the agreement is subject to shareholder and regulatory approvals but has been unanimously recommended by Murray Goulburn's board of directors, provided a better offer doesn't emerge.
Saputo said it expects to finance the transaction through a new bank loan. National Bank Financial (TSX:NA) and BMO Capital Markets (TSX:BMO) will be co-lead arrangers for the financing.
The Australian dairy company produces products for the international market under the Devondale, Liddells and Murray Goulburn Ingredients brands