Talk grows of Fonterra takeover of National Foods

By NZPA

Wednesday 3rd July 2002

Speculation is growing in Australia that New Zealand dairy giant Fonterra will gain a back-door listing on the Australian Stock Exchange by merging its new Australasian consumer goods vehicle with dairy company National Foods.

Fonterra, which has a 17.7 percent stake in National Foods, declined to say exactly what it would be doing with its stake when it announced the new company, Australasian Food Holdings Ltd (AFHL), on Monday.

Fonterra chief executive Craig Norgate said he was happy to let speculation on National Foods continue as it reviewed its options.

France's Danone and Dairy Farmers of New South Wales, with 10 and 9 percent respectively, are each seen as probable buyers.

But the Australian Financial Review reported today that there was talk of a Fonterra takeover, and that Dairy Foods might come in on the deal, possibly by folding its assets into AFHL.

National Foods told the AFR it had held no talks with Fonterra yet.

Brokerage ABN Amro told the newspaper that any successful bid for National Foods, one of Australia's three biggest dairy companies, would need to be priced well above $A4, ($NZ4.66) possibly above $A4.50.

Monday's announcement saw Fonterra creating greater critical mass in Australia by creating AFHL, a merger of its consumer goods arm with that of Melbourne-based dairy company Bonlac, in which Fonterra owns a 25 percent stake.

Bonlac, which has an option to sell its 11.4 percent stake in AFHL, told the AFR it would take a wait-and-see attitude.

Bonlac chief executive Peter Myers declined to say what the fixed value was on his company's stake.

But ABN Amro suggested Bonlac had locked in a value of $A194 million for nine months. Bonlac had an option-to-sell period of five years.

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