Dairy giants queue for Globalco reject

Friday 6th July 2001

By Nick Smith

Three Australian companies are queuing to buy New Zealand Dairy Foods, potentially setting up a clash of the Australasian giants.

Globalco - which can now plan with certainty with the appointment of Craig Norgate as chief executive - will be one giant but the sale of Dairy Foods could be the catalyst for a second giant, depending on which company buys it.

Dairy Foods chief executive Peter McClure said yesterday "if an Australian buyer is successful, we should be the other."

"There are a couple of Australian buyers taking a good look at us," he said. While he said he remained "neutral" on which tack the company should take, consolidation in the market would lead to two major players in the Australasian market.

The interested Australian buyers are National Foods, Parmalat and Australian Dairy Farmers.

National Foods leads the buyout race, having been involved in discussions with the Kiwi company when the original Mergeco proposal was first mooted. It was subsequently knocked back by the Commerce Commission.

"We've maintained dialogue," Mr McClure said.

But complicating any National Foods bid is NZ Dairy Group's shareholding in National Foods.

NZ Dairy Group has indicated it will either sell its 18% stake or make an offer for the rest of the shares in National Foods.

If the latter option is exercised, it would derail any National Foods bid for Dairy Foods as that would bring it back under Globalco's umbrella, breaching Commerce Commission rules.

Under the merger deal, local competition is being maintained through the sale of Dairy Foods, which sees the Anchor and Fernleaf brands pitted against Mainland and Tararua.

Mr McClure said the other contenders still had issues to resolve, particularly Australian Dairy Farmers, where an attempted restructuring "was knocked back by shareholders."

There is much work to be done. Dairy Foods today announces the appointment of a financial adviser to handle the sale process.

Also it has yet to nail down a supply contract with Globalco, essential before the company can be sold.

Once this has been achieved, Dairy Foods will prepare an information memorandum for National Foods, Parmalat and Australian Dairy Farmers.

"There are any number of permutations," Mr McClure said. "It will be very interesting to watch what happens as we get our process under way."

Meanwhile, Mr Norgate was unavailable for comment yesterday.

Not only has he been meeting and phoning Globalco staff around the country and overseas, he has also been a witness in the long-running Tui merger court case.

Mr Norgate has been a director of the NZ Dairy Board since 1998 and chief executive of the Kiwi Co-operative Dairies after joining the company in 1991 as general manager.

He is a director of Mainland Products, Peters & Browne Foods and the New Zealand Rugby Union.

He is also chairman of Kiwi Dairy Products and Food Solutions Group.

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