Montreal-based Saputo Inc. has raised its offer in a three-way bidding war for the Warrnambool Cheese & Butter Factory Co. in the state of Victoria, Australia.

Hoping to deliver the knock-out blow in the cheese war, Saputo is now offering A$9.20 per Warrnambool share, equivalent to $515 million Australian or $498 million Canadian.

The Warrnambool board has unanimously supported the Canadian offer, which is contingent on Saputo controlling 50 per cent of the Australian company. It announced Monday it would not pay dividends this quarter until the takeover details are resolved.

It is competing for the dairy producer with Australia’s Murray Goulburn Cooperative Co., which is offering $9 Australian a share and Bega Cheese Ltd., which is offering cash and stock.

Bega is Warrnambool’s largest shareholder, with 18 per cent of stock and Murray Goulburn, Australia’s largest dairy, owns 17 per cent.

In addition, Japan’s Kirin Holdings Co. bought a 9.99 per cent stake in Warrnambool last month, seeking to protect an arrangement under which the producer supplies at least 12,000 tonnes of cheddar each year for its Australian unit’s Coon and Cracker Barrel cheese brands

All of the players have an eye on Asia’s rising demand for dairy products, including milk powder. Australia is seen as a low-cost producer of dairy and its products have a foothold in Asia’s emerging markets.

Bega, another Australian dairy based in New South Wales, has said its cash and share offer is final. However, Murray Goulburn may be mulling a better offer, according to Irene Nattel of RBC Capital Markets.

She said  the strategic rationale for the transaction remains unchanged for Saputo: provide another low-cost milk production platform. Saputo is the largest milk processor in Canada and sells its products in 40 countries. The Warrnambool acquisition is part of an international expansion plan by the Montreal producer.

Warrnambool will hold information sessions with shareholders and suppliers this week, which will be attended by Saputo executives, the Australian company said in a statement.

With files from Canadian Press