Dairy co-op makes bid for food giant

Diary cooperative Murray Goulburn has entered into the takeover battle for Warrnambool Cheese and Butter, trumping rival bidders with a $420 million offer.

Murray Goulburn has announced an off-market takeover offer at $7.50 a share, beating Canadian diary giant Saputo's $7 a share offer, which has the backing of the Warrnambool board.

The offer also beats Bega Cheese's offer, which would see WCB shareholders receive 1.2 Bega shares plus $2 cash.

Murray Goulburn chairman Phillip Tracy said the proposed takeover would create one of the largest Australian-owned food and beverage businesses, with annual revenues of more than $3.2 billion.

"This is an historic opportunity for Murray Goulburn and WCB suppliers and shareholders to create a larger-scale, globally competitive Australian food and dairy company owned by Australian dairy farmers," he said.

If the takeover goes ahead, Murray Goulburn will invite Warrnambool suppliers to join the cooperative, which it plans to rename Murray Goulburn Warrnambool.

Murray Goulburn, which currently owns more than 17 per cent of Warrnambool, said it was seeking a unanimous recommendation for the proposal from the company's board.

"We believe our proposal is both competitive and financially compelling to WCB shareholders," Murray Goulburn chief executive Gary Helou said.