MONTREAL — Canada's largest cheese maker, Saputo Inc., is rumoured to have made a bid to expand to the Down Under.
The Australian Financial Review has reported that the world's 15th largest dairy processor was one of three parties to submit formal bids Friday for the manufacturing assets of Dairy Farmers in Australia.
TD Newcrest analyst Michael Van Aelst said this would be a very strategic acquisition for Saputo and give it a second source of low-cost raw milk to make dairy products for the local and export markets, including China.
“Saputo should not be considered a favourite given that the other two consortiums bidding could generate much greater manufacturing and distribution synergies,” Mr. Van Aelst wrote in a report Monday.
Saputo Inc.
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“But if Saputo has made it this far in the process, then it must still have a pretty good chance of being the winning bidder.”
The competing bidders would have to sell some assets to get Australian Competition and Consumer Commission approval.
Saputo's efforts to expand its main operations beyond Canada, the United States and Argentina come as chief executive officer Lino Saputo Jr. saw his earnings skyrocket 46.6 per cent to nearly $2.35-million in the past year.
Mr. Saputo earned $950,000 in salary and $1.4-million in bonuses in fiscal 2008, according to the company's proxy circular, released ahead of next month's annual shareholders' meeting.
That compares with $800,000 each in salary and bonus received in 2007. Mr. Saputo earned $1.4-million in 2006.
The Montreal-based cheese maker's 2008 net earnings increased nearly 21 per cent to $288.2-million as sales increased 26.4 per cent to $5.06-billion.
“For fiscal 2008, no options were granted to the chief executive officer, as his interest in the principal shareholder constitutes a sufficient long-term incentive,” said the proxy circular.
Saputo Jr. stock options were valued at more than $4-million as of March 31, 2008.
Saputo is Canada's largest cheese maker, producing nearly one third of the country's cheese and is one of its three largest milk processors.
It is also one of the largest U.S. cheese producers with seven per cent of the natural cheese production. Its Argentine operations are the South American country's third largest, processing about seven per cent of mill production.
With 9,200 employees, Saputo transforms five billion litres of milk annually at 47 production plants, primarily in Canada and the United States.
On the Toronto Stock Exchange, Saputo shares lost 15 cents to $26.83 in trading Monday.
