By Phil Boeyen, ShareChat Business News Editor
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Friday 5th April 2002 |
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Fonterra chairman John Roadley announced the deal early Friday. Under last year's Dairy Restructuring Act the company was required to sell its 50.0004% share in Dairy Foods by September.
Graeme Hart's Rank Group, which also owns a majority of Australian yeast and spice company Burns Philp, will pay $1.70 per share for 70 million shares under the agreement.
The purchase will occur under a full takeover offer to be made by Rank Group for all of the shares in New Zealand Dairy Foods.
Fonterra CFO Graham Stuart says the sale is good for New Zealand consumers, provides certainty for Dairy Foods' employees and is the best offer for Fonterra and its shareholders.
"From the time the merger agreement was signed to create Fonterra, we were clear that we would need to divest our shareholding in New Zealand Dairy Foods to ensure tough competition in the domestic consumer market, and the government later put this undertaking into law.
"The $1.70 offer is the best available following an exhaustive sales process that canvassed all potential international buyers. The deal also provides for minority shareholders in New Zealand Dairy Foods - who are mostly Fonterra shareholders - to receive the same takeover offer as Fonterra.
Mr Stuart says the company is pleased that the best offer came from a New Zealand buyer says the Burns Philp connection provides New Zealand Dairy Foods with a link to a global food company with operations in over 25 countries.
Dairy Foods has around 40% of the New Zealand dairy market with brands such as Anchor, Fernleaf, Chesdale, Fresh 'n' Fruity, Royal Tasman and Ornelle.
The newly announced deal follows a failed bid by Australian dairy company National Foods which was turned down by the Commerce Commission over concerns about competition.
Dairy Foods chairman John Storey says the key issue for his board now is to advise the remaining 6,200 dairy farmer shareholders.
"This will need to wait until receipt of the independent appraiser's report. With Fonterra committed to accepting Rank's offer, the remaining question is the level of ownership Rank achieves."
Mr Storey says Rank's offer has been passed on to independent advisors, Cameron & Co, and directors anticipate receiving an appraisal by mid April.
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