MONTREAL -- Australia's largest dairy producer has called off its battle for control of Warrnambool Cheese and Butter and decided to sell its shares to Canadian rival Saputo Inc. (TSX:SAP).

Murray Goulburn Co-Operative announced the decision through the Australian Securities Exchange on Thursday.

It expects to receive at least AU$92.8 million cash from the sale of its Warrnambool shares -- roughly 17.7 per cent of the total.

Murray Goulburn says its decision to accept the Canadian offer will push Saputo's majority above the 75 per cent threshold -- although that hasn't been confirmed by Saputo as yet.

Saputo had set a Wednesday deadline for its final offer for Warrnambool, which it sees as a strategic acquisition that provides it with an entry into the important Asia-Pacific region.

At the 75 per cent majority level, Saputo will pay AU$9.40 per WCB share but could pay as much as AU$9.60 each if it gets at least 90 per cent of the total.

According to a regulatory filing on Thursday by Saputo, it had 57.7 per cent of Warrnambool's shares as of Jan. 22 -- giving it a majority that guaranteed it would pay at least AU$9.20 per share.