Australian dairy company Bega Cheese is selling its 18.8 per cent stake in Warrnambool Cheese and Butter to Canada’s Saputo.

New South Wales-based Bega had kicked off an international bidding war for Victorian dairy firm WCB more than four months ago, with a cash and share bid initially worth around $5.78 per WCB share.

WCB shares surged from $4.51 at the time of Bega’s bid to be now trading at $9.35 – Saputo’s offer is worth $9 per share if it gets less than half of WCB shares, $9.20 if it gets 50-90 per cent, and $9.60 if it gets 90 per cent or more acceptance.

Bega says it will receive between $94.7 and $101 million from the sale of its shares, booking a profit before tax and costs of between $61.8 and $68.2 million, after originally buying into WCB in 2010.

Bega’s executive chairman Barry Irvin says his firm’s investment in WCB has been a win-win, even though Bega lost the takeover battle.

“Bega Cheese’s initial investment in WCB and subsequent takeover offer for the company has created significant value for both companies’ shareholders,” he noted in a statement.

“Bega Cheese’s takeover offer was the catalyst for a process which has highlighted the value of the Australian dairy industry, a rerating of Bega Cheese’s share price and a substantial profit for Bega Cheese.”

On January 13, Saputo said it controlled almost 26.5 per cent of WCB shares – adding Bega’s 18.8 per cent stake now gives it at least 45.3 per cent of the takeover target six days out from the closing date of its offer.

Saputo has declined to comment on the latest developments, except to say it is “delighted” by Bega’s share sale.

The other substantial dairy shareholders in WCB, rival takeover bidder Murray Goulburn and Japanese giant Kirin, hold 17.66 and 10 per cent of WCB shares respectively.

Murray Goulburn’s $9.50 a share bid is still awaiting a ruling by the Australian Competition Tribunal as to whether it can proceed, but it seems increasingly likely that Saputo may have purchased half of WCB before that decision is made.