The three-way bidding war for Warrnambool Cheese and Butter has escalated, with Murray Goulburn now offering $505 million to trump Canadian bidder Saputo.
Murray Goulburn is now offering $9 per Warrnambool share - twice what the company was worth when Bega Cheese made the first takeover move in September.
Murray's revised bid is significantly higher than its $7.50 previous offer, and trumps Saputo's $8.00.
Bega is offering 1.2 Bega shares and $2 cash for every Warrnambool share.
Warrnambool shares gained 56 cents, or 6.6 per cent, to $9.10 after Murray Goulburn's new offer.
The Warrnambool board, which has supported the Saputo offer in the absence of a superior bid, said it was considering Murray Goulburn's revised offer and advised shareholders to take no action.
Murray Goulburn managing director Gary Helou said he hoped the Warrnambool board would recommend his company's revised bid, given it was much higher than those of its competitors.
"We're confident that when they review the offer they will apply their fiduciary duties and deliver the unanimous recommendation to support us on the basis of the significant value it offers its shareholders," Mr Helou said.
A combined Murray Goulburn-Warrnambool company would deliver an Australian dairy food business that was export oriented, particularly towards Asia, and provide long term benefits to the local dairy sector, he said.
The improved offer reflected market outlook factors, including rampant growth in Asia's demand for dairy products and Australia's potential to increase its share in supplying that demand, he said.
Warrnambool has previously expressed concerns that Murray Goulburn may not gain competition regulator approval for its bid.
Murray Goulburn is seeking approval on the grounds a combined company would be of national public benefit.
"It'll be a tragic outcome for this industry if Australia's largest exporter can't be allowed to merge in a commercially meaningful manner with Australia's second largest dairy exporter to create a relevant, regional-scale, efficient business unit for the benefit of the dairy sector and the benefit of dairy farmers," Mr Helou said.
Bega Cheese's bid, at current prices, effectively offers $7.50 per Warrnambool share.
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