The takeover of Murray Goulburn by Saputo looks to be edging closer after a pair of independent reports backed the Canadian giant's $1.3 billion offer for the troubled Australian dairy processor.
Murray Goulburn, whose fortunes have soured since it unexpectedly slashed the price it paid farmers for their milk in April 2016, has distributed details of the assessments by advisory firms Grant Samuel and KPMG.
Grant Samuel concluded that the proposed sale to Saputo is in the best interests of Murray Goulburn's suppliers and unit holders because it preserves its assets - especially milk supply - from further deterioration.
It said the offer is fair and reasonable.
"In Grant Samuel's opinion, a stand-alone strategy that aimed to preserve an independent Murray Goulburn would involve unacceptable risks," Grant Samuel said.
"There would be a real prospect of further milk losses taking Murray Goulburn past a tipping point that would precipitate loss of financier support and wholesale destruction of equity value."
Murray Goulburn's April 2016 price cut caused chaos across the sector and prompted many suppliers to quit the industry or shift to other processors.
The co-operative's ability to pay a competitive farmgate price to secure its supply has been constrained by its high debts, and it has lost 45 per cent of its milk intake.
Of the $1.3 billion offered by Saputo, about $114 million will be used to fund additional milk payments to Murray Goulburn's suppliers, including a step-up in the farmgate milk price.
Murray Goulburn has estimated that the net equity value of the Saputo offer is about $653 million.
KPMG - which was engaged by Murray Goulburn's ASX-listed entity, the MG Unit Trust - concluded that the full value estimate of the asset sale proceeds is fair and reasonable.
Murray Goulburn shareholders will meet on April 5 in Melbourne to consider the deal.