Murray Goulburn
Co-Operative Co.
Limited
ABN 23 004 277 089
29 January 2010
Murray Goulburn’s Proposal to Acquire Warrnambool Cheese & Butter
Murray Goulburn Co-operative Co. Limited (MGC) today advised its supplier-shareholders that it had made a
proposal to acquire all the shares in Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB).
The letter explained that MGC put a proposal to the WCB Board in December last year and that this proposal
had been rejected. Just prior to Christmas WCB informed the Australian Securities Exchange that it had
received and rejected two proposals from two unrelated companies without expressly naming MGC.
In his letter to supplier-shareholders MGC Chairman Grant Davies indicated that MGC was currently
considering next steps and would keep supplier-shareholders informed.
Key benefits
Under the MGC proposal WCB and MGC would merge to become a 100% dairy farmer-owned Australian co-
operative. WCB’s milk suppliers would have the opportunity to join a strong, well capitalised and growing co-
operative that is focussed foremost on maximising returns and reducing volatility to its supplier-shareholders.
MGC believes the key benefits of a merged MGC/WCB entity would be as follows:
To create a stronger merged business post the farmgate in a way that ensures the benefits flow to dairy
farmers and their communities. It would achieve this by building a stronger farmer-owned dairy
cooperative that can improve farmgate milk prices
A stronger dairy farmer-owned company would be better positioned to capitalise on future market
opportunities with the scale and strong financial capacity to continue to invest in the business
Board and management stability and sustainability for WCB
Deployment of WCB’s quality plant and facilities as the pre-eminent cheese processing centre for the
dairy industry in the southern region
Maintenance of WCB’s strong regional branding and community commitment
Leveraging of opportunities for expansion, innovation, long-term growth and job opportunities
through stronger dairy industry as a result of merger
Increased ability to further develop domestic and international markets
Mr Davies said that the MGC Board believed the proposed merger was good for MGC and was also an
excellent opportunity for WCB suppliers and shareholders.
“These benefits are a unique proposition for WCB that no other potential buyer can offer”, Mr Davies said in
his letter.
“At this stage our proposal has not been recommended by the WCB Board. However, we believe it is a very
attractive proposal for the shareholders and suppliers of WCB.
“MGC would bring to the WCB business the commitment and marketing capability for product diversification
and innovation to maximise supplier returns and further develop export and domestic markets”, Mr Davies said.
Rationale
Mr Davies said that MGC has maintained a very strong balance sheet despite the global financial crisis and
following a recent review of its banking arrangements has in place the financial capacity to fund such an
expansion.
140 Dawson Street Brunswick Victoria 3056
PO Box 4307 Melbourne 3001 Australia
Telephone (03) 9389 6400
Facsimile (03) 9387 5741
“The MGC proposal provides a return to a 100% farmer-owned structure from which WCB was built. The co-
operative structure would remove the conflict between shareholder and farmer interests that exists when a dairy
company has a majority of non-supplier shareholders.
Mr Davies explained that under the proposal MGC is committed to maintaining WCB core operations and
facilities and incorporating these with MGC’s operations in the South-Western region of Victoria and South
Australia.
“We propose to maintain WCB’s name, brands and strong links to the local community.
“Increasingly, we are seeing the emergence of large multi-national companies as significant players in the
Australian dairy industry and we believe as a co-operative owned by its members we must be positioned with
substantial scale, resources and capabilities in order to continue to successfully serve the supplier-
shareholders”, Mr Davies said.
Mr Davies said that the merged company would be well positioned to support strong farmgate milk prices for
the long term. This merger will help ensure that MGC, as the only large whole-of-chain co-operative,
maximises the milk price in the interests all Australian dairy farmers.
“The MGC Board believes the proposal represents a fair price both for WCB shareholders and for MGC and its
members.
“We are currently contemplating our next steps but we are confident that a merger with WCB is a very positive
step for MGC supplier-shareholders. It is a major opportunity to deliver benefits that flow directly to farmers
and not others in the supply chain and that is good for all dairy farmers and local communities”, Mr Davies
said.
Mr Davies assured suppliers that the Board considered all proposals very carefully to ensure that the Board is
totally convinced that the proposal is in the best interests of supplier-shareholders.
“In this case we have undertaken comprehensive analysis via our executive team and external advisers. This is
an opportunity to benefit dairy farmers that can only be delivered with strong leadership from MGC and WCB
at this time”.
MGC are advised by KPMG Corporate Advisory and Corrs Chambers Westgarth.
Background
About MGC:
Murray Goulburn Co-Operative has 2,500 supplier shareholders and has grown from modest regional roots to
become Australia’s largest 100% dairy farmer owned co-operative exporting to over 100 countries. MGC is
Australia’s largest exporter of processed food and employs over 2,000 people in regional Australia. Its flagship
Devondale brand is recognised nationally as a market leader.
About WCB:
WCB is a publicly listed company on the Australian Securities Exchange. It has approximately 600 milk
suppliers in the Western District and Central Victoria, and in the South east region of South Australia, together
with manufacturing and distribution operations at Allansford, near Warrnambool. WCB sells milk products into
numerous established international markets and also has a strong domestic presence.
Media contacts:
Angus Urquhart / Jo Lynch
Hintons
Tel: 03 9600 1979
Mob: 0402 575 684 / 0411 208 101
MGC contact:
Robert Poole
General Manager Industry and Government Affairs
Tel: 03 9385 6747
Mob: 0408 057 073
NEWS 
