Saputo increases its all-cash takeover offer for Australian dairy company Warrnambool Cheese and Butter Factory to AU$8/share; Warrnambool board of directors reaffirms its recommendation of Saputo's offer

Nevin Barich

MONTREAL , October 25, 2013 (press release) – Saputo Inc. ("Saputo") (TSX:SAP) today announced that it has increased to AU$8.00 its all-cash per share takeover offer (the "Offer") for all the issued shares of the Australian dairy company Warrnambool Cheese and Butter Factory Company Holdings Limited ("Warrnambool").

The Warrnambool Board reaffirms its recommendation of Saputo's Offer:

In response to the offer price increase by Saputo, the Board of Warrnambool has reaffirmed their unanimous recommendation that Warrnambool shareholders accept the Offer in the absence of a superior proposal. Each Warrnambool director and executive(1) has also reaffirmed their intention to accept the Offer for all of the Warrnambool shares they hold or otherwise control in the absence of a superior proposal.

Saputo's Offer is superior to all other proposals for Warrnambool:

Excluding any additional benefit related to the distribution of special dividends, Saputo's Offer of AU$8.00 cash per share is superior to all other proposals made for Warrnambool:
a 7% premium to the AU$7.50 cash per share proposal announced by Murray Goulburn Co-operative Co. Limited on 18 October 2013;

a 20% premium to the implied value of the cash and scrip offer announced by Bega Cheese Limited on 12 September 2013 based on Bega's closing price on 18 October 2013.

As previously agreed with Warrnambool, the Offer also allows for Warrnambool to declare and pay special dividends of up to a maximum of AU$1.31 per Warrnambool share, with a corresponding reduction in the consideration otherwise due to Warrnambool shareholders, upon Saputo reaching specified relevant interest thresholds in Warrnambool, to enable the distribution of tax credits estimated by Warrnambool to deliver additional value of up to AU$0.56 per share depending upon the individual tax circumstances of each Warrnambool shareholder.

In addition, there is less uncertainty for Warrnambool shareholders with Saputo's Offer, as it is subject to a limited number of conditions (including foreign investment approval and a minimum tender condition of greater than 50%).

Based on the current issued share capital of Warrnambool, the purchase price for 100% of the shares of Warrnambool would equal approximately $444 million(2) and will be funded out of Saputo's new $500 million three-year bank term loan.

There can be no assurance that the Offer will be successful, either in whole or in part, as Warrnambool is also the subject of other non-solicited takeover offers or proposals.
Rothschild and Rabobank are acting as the financial advisers to Saputo, and Maddocks and Stikeman Elliott are its legal advisers. National Bank of Canada and Bank of Montreal are acting as co-lead arrangers for the new bank loan.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements within the meaning of securities laws. These statements are based, among other things, on Saputo's assumptions, expectations, estimates, objectives, plans and intentions as of the date hereof regarding the Offer, its success, anticipated benefits, the number of shares that Saputo will actually be able to purchase and any change to the Offer price or conditions.

Forward-looking statements are based on Management's current estimates, expectations and assumptions, which Management believes are reasonable as of the date hereof, and, accordingly, are subject to changes after such date. You should not place undue importance on forward-looking statements and should not rely upon this information as of any other date.

Except as required under applicable securities legislation, Saputo does not undertake to update or revise these forward-looking statements, whether written or verbal, that may be made from time to time by itself or on its behalf, whether as a result of new information, future events or otherwise.

About Saputo

Saputo produces, markets, and distributes a wide array of dairy products of the utmost quality, including cheese, fluid milk, extended shelf-life milk and cream products, cultured products and dairy ingredients. We are one of the top ten dairy processors in the world, the largest in Canada, the third largest in Argentina and among the top three cheese producers in the United States. Our products are sold in more than 40 countries under well-known brand names such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Dragone, DuVillage 1860, Friendship, Frigo Cheese Heads, Great Midwest, King's Choice, Kingsey, La Paulina, Milk2Go, Neilson, Nutrilait, Ricrem, Salemville, Stella and Treasure Cave. Saputo Inc. is a publicly traded company whose shares are listed on the Toronto Stock Exchange under the symbol "SAP".

About Warrnambool

Warrnambool produces a range of dairy products for domestic and export markets. Its products include cheese, butter and butter blends, milk, cream and dairy ingredients.
Warrnambool draws milk from some of the most productive dairying regions in Australia, including southwest Victoria, southeast South Australia and the Fleurieu Peninsula. Warrnambool operates two manufacturing sites and has over 420 employees. Warrnambool is a public company listed on the Australian Securities Exchange (ASX Code: WCB).

(1) The members of the executive team as set out in Warrnambool's 2013 Annual Report.

(2) Amount calculated using an indicative exchange rate of CDN$1 = AU$1.01.

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