Murray Goulburn has lifted its offer for Warrnambool Cheese and Butter to $533 million to stay in the three way race for the historic dairy company.
The latest Murray Goulburn offer - $9.50 for each Warrnambool share - further escalates its battle with Canadian dairy giant Saputo and Bega Cheese.
Murray Goulburn said its latest offer delivered demonstrably superior value to the competing proposals.
"Murray Goulburn remains firmly committed to acquiring WCB," managing director Gary Helou said.
"A combined Murray Goulburn and WCB will create one of the largest Australian owned food and beverage businesses and a globally competitive dairy foods company 100 per cent controlled by dairy farmers."
Murray Goulburn also wishes to explore the potential of Warrnambool paying special dividends under its revised offer, so that some Warrnambool shareholders may get franking credit benefits.
Murray Goulburn's $9.50 cash offer is higher than the latest offer from Saputo, but is conditional upon Murray Goulburn attaining more than 50 per cent of Warrnambool's shares and obtaining regulatory approval.
Saputo's latest offer consists of an unconditional $9.00, plus an extra 20 cents if Saputo gains more than 50 per cent of Warrnambool's shares.
Warrnambool's board had supported the Saputo offer in the absence of a higher bid.
It will soon meet to review the new offer, and has advised shareholders not to act.
Rivkin Securities director Shannon Rivkin said the conditions attached to the Murray Goulburn may mean it falls short of what it needs to pay to have the Warrnambool board abandon support for Saputo's "far more certain" offer.
"Still ... it could simply mean that Saputo ups its bid to $9.50 to make the decision for shareholders easier," Mr Rivkin said.
Some critics of the Murray Goulburn bid have questioned whether the company behind the Devondale brand would be able to pay off the debt arising from an acquisition of Warrnambool.
They say Murray Goulburn may not be able to lift milk prices paid to dairy farmers if debt payments are high.
Murray Goulburn's prior offer was $9.00, which had already been revised from $7.50.
Bega Cheese has made a final offer of 1.5 Bega shares and $2 cash, worth $8.975 based on the closing price of Bega shares on Wednesday.
When Bega started the takeover battle for Warrnambool in September, the target's shares were worth $4.51.
Warrnambool shares gained seven cents on Thursday to $9.32.
Bega shares gained nine cents to $4.74.
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