The country is the world’s fourth-largest exporter of dairy products. Since Warrnambool Cheese and Butter was first approached by a bidder in September it has attracted two other suitors. WCB’s shares have doubled, and trading activity has risen 15-fold. The group now trades on 60 times trailing earnings, making it the most expensive dairy group of any size in the world. To understand the interest, look to Asia, where demand for dairy products has jumped a fifth in seven years.

But consumption per head is still at only a quarter of European and US levels, according to the International Dairy Federation.

And while consumption in the biggest potential markets – China, Indonesia and India – rose faster than the overall rate, China still consumes less than 40kg per head and demand rose 39 per cent.

This explains why Asia is the destination for almost half the $12bn committed to big-project dairy investment worldwide. Australia and New Zealand have attracted $1.2bn – as much as China, where the likes of Nestlé and Fonterra want to expand.

Taking a product, assuming rising demand for it and multiplying by 1.3bn Chinese consumers is a risky game. But China is short of milk and still working to create a safe modern industry. Its cows yield less than Australian or Kiwi herds, too. And, as the fight for WCB shows, there is a shortage of assets to buy. Saputo, a Canadian dairy company, lifted its offer for Warrnambool on Friday by more than a 10th to A$9 a share.

That values the target’s debt and equity at a stunning 22 times trailing earnings before interest, tax, depreciation and amortisation. There is no milky gentleness about this dairy battle.

”Non-Chinese agriculture assets are the China plays of the next decade.

Ackowledgement of source material –  FT Resource Daily