* Bega raises bid to 1.5 shares and A$2 per WCB shr
* Bid values WCB below Murray Goulburn's $470 mln offer
* Lack of conditions gives Bega a head-start- analyst
* Canada's Saputo waits in wings (Adds comments from Warrnambool, links to graphic, factbox)
SYDNEY, Nov 14 (Reuters) - The hotly contested takeover battle for Australia's oldest dairy company got even hotter as its largest shareholder Bega Cheese Ltd raised its bid to $461 million and said it will not attach conditions to its offer like other suitors.
Bega and Murray Goulburn Co-operative Co Ltd, the biggest shareholders in Warrnambool Cheese and Butter Factory Co Holdings Ltd (WCB), are locked in a three-way tussle with Canada's Saputo Inc for the 125-year-old dairy company.
WCB is being chased for its export connections to Asia, where demand for both for its basic dairy produce and high-tech milk extracts is surging.
"We needed to give the shareholders of Warrnambool Cheese and Butter a live option... the ability to accept an offer," Bega Chairman Barry Irvin said in a telephone interview on Thursday after the company announced its latest offer.
Bega raised its offer to 1.5 of its shares and A$2 cash for each WCB share from its initial offer of 1.2 shares and A$2 cash in September. At Wednesday's closing price, the offer is worth A$8.87 per share, or around A$496 million ($461 million).
Warrnambool advised shareholders not to take any action on the latest offer.
While the offer falls just short of the latest A$9 per share cash offer from Murray Goulburn, analysts said Bega could not yet be ruled out of the running.
"At first investors might see this latest offer from (Bega)as insignificant," said Shannon Rivkin, director at Rivkin Securities in Sydney.
"However, as it is unconditional, this bid presents the first opportunity where an investor can accept a complete offer with no conditions pending, albeit a somewhat floating offer given it is part scrip," Rivkin said.
Bega chose to waive a number of conditions it had imposed on its previous offer in September, such as on the conduct of the Warrnambool business until the bid process was completed, Irvin told Reuters.
Bega is also more advanced in meeting outside conditions, compared to Murray Goulburn. Bega has already got approval from Australian competition regulators for its initial bid.
Murray Goulburn's bid is still conditional on receiving approval from the regulators and getting more than 50 percent of acceptances. Murray Goulburn owns 17.26 percent of WCB.
"If you are a Warrnambool shareholder...you've got a A$9 bid from MG (Murray Goulburn), but can you actually accept it? The answer is no," said a banking source, declining to be identified because the process is confidential.
Saputo, Canada's largest dairy producer, has long been touted as the likely eventual winner, given its formerly top bid of $420 million has been approved by regulators, although it also had a minimum acceptances required of more than 50 percent of Warrnambool shares. It is also seen as having greater financial firepower to compete than other players in the deal.
Industry heavyweights, including New Zealand's Fonterra Co-Operative Group Ltd, the world's largest dairy exporter, and Japan's Kirin Holding Co Ltd, have taken stakes in Bega and WCB, respectively, with intent to influence the consolidation in the Australian dairy industry.
Bega, which owns around 18 percent of WCB, said it would not be increasing its bid.
WCB shares, which have more than doubled since Bega's initial approach in September, were down 0.3 percent at A$9.07 on Thursday.
The two-month long takeover battle has turned WCB into the world's most expensive dairy company on a price-to-earnings basis. It trades at 38.3 times 12 months trailing P/E, according to Thomson Reuters data.
Bega shares were 2.6 percent lower at A$4.46, but have more than doubled in the past year.
Murray Goulburn was not immediately available to comment. ($1 = 1.0755 Australian dollars) (Reporting by Lincoln Feast and Jackie Range; Editing by Ryan Woo)