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Lino Saputo Jr., president and chief executive officer, poses in his office in Montreal, Nov. 14, 2013.

Saputo Inc.'s battle for control of an Australian dairy producer has escalated into a no-holds-barred fight that analysts warn is the stuff of "La La Land."

The Montreal-based cheesemaker wants Australia's Warnambool Cheese and Butter Factory as a bridge to nearby China, where milk consumption is soaring.

But after the bid by Saputo's rival was raised again Thursday, analysts question whether a deal will pay off for whoever wins.

An independent report by KPMG pegged the value of Warnambool at between $7 (Australian, $6.75 Canadian) and $7.50 a share. But Saputo's latest offer stands at $9.20, while its rival Australia's Murray Goulburn Co-operative Co. (MG) hiked its bid to $9.50. The initial bid in September – from another Australian dairy firm, Bega Cheese Ltd. – was just $5.78 per share.

"This is a milk run gone wild," said John Stephenson, a fund manager with First Asset Investment Management Inc. in Toronto. "I think it's becoming silly, getting into the La La Land of valuations and stupidity."

Montreal-based Saputo, the world's 10th-largest dairy processor, has proven to be a tenacious player in the bidding.

Tenacity aside, however, Saputo is also known as a disciplined buyer that makes smart, accretive acquisitions, said Mr. Stephenson.

"Certainly [Saputo] could walk away and I think the Street would like to see that," he said.

Saputo president and chief executive officer Lino Saputo Jr. has said that winning Warrnambool would secure a well-positioned platform from which to expand activities in rapidly growing markets not only in nearby Asia – particularly China – but also farther afield.

"There are a number of emerging markets around the world that have nothing to do with China," Mr. Saputo was quoted by AAP Newswire recently, citing Russia, Brazil and Japan.

Saputo officials did not respond to requests for comment on Thursday.

MG is playing up the possibility of creating a homegrown dairy giant that can be a global player via a merger with 125-year-old Warrnambool, located in Victoria State.

But MG faces a drawn-out process of up to six months to win approval from Australia's competition authorities.

Saputo has won the backing of Warrnambool's board, although the board said on Thursday it would consider MG's revised offer and advise shareholders of its recommendation at a later date.

Bega is Warrnambool's largest shareholder, with an 18-per-cent stake, while MG holds a 17-per-cent block.

Dairy-farmer suppliers in the Victoria region hold between 30 and 40 per cent of Warrnambool.

Just to make things interesting, Japan's Kirin Holdings Co. Ltd.'s Lion beverage unit last month took a 10-per-cent position so as to protect its joint-venture pacts with Warrnambool.

Both Saputo and MG are reported to be planning public meetings in rural Victoria this week to make their respective pitches to the farmers.

Saputo's revised bid of $9.20 per share is conditional on its winning majority ownership of Warrnambool.

In an attempt to hobble Saputo's offer, MG on Wednesday requested that the Australian Takeovers Panel force intervene because the Saputo proposal is unfair to some shareholders.