Warrnambool Cheese and Butter (WCB) has accepted a $390 million takeover offer made by Canadian dairy company Saputo.

The WCB Board is recommending shareholders accept Saputo's offer of $7.00 per share.

A statement by Saputo says the $7.00 share represents a substantial premium, with the possibility of additional value of up to $0.56 per share for some Warrnambool shareholders related to the distribution of franking credits.

The offer is subject to minimal conditions, including a minimum acceptance condition of greater than 50 per cent of Warrnambool shares.

In a statement released to the stock exchange, the Chief executive and managing director of WCB, David Lord said, Saputo's offer is a better deal offered by rival Bega Cheese.

"The Saputo's offer underscores the strategic value of WCB's assets and vindicates the Board's decision to reject Bega's inadequate, highly conditional offer."

Last month Bega Cheese made a takeover offer which is now valued at about $350 million.