Total control of Dairy Foods in Hart's sights

By NZPA

Thursday 6th June 2002

Billionaire Auckland businessman Graeme Hart is on the verge of gaining total control of former Fonterra subsidiary New Zealand Dairy Foods Ltd.

Mr Hart -- New Zealand's richest man -- has extended the deadline for farmers to accept his $1.75 per share offer for shares in Dairy Foods as his holdings nudge the 90 percent mark.

The offer was to have closed last Friday but has been extended until 5pm next Thursday, enough time for Mr Hart's Rank Group to comfortably take total control of Dairy Foods.

By Tuesday Rank had 89 percent of shares in Dairy Foods and Rank chief financial officer Bryce Murray confirmed the company would move to a compulsory purchase of the remaining shares once it reached 90 percent.

He said the extension had nothing to do with Rank being so close to the 90 percent threshold.

The company had a lot of inquiries from farmers wanting replacement forms and "it was obvious to us a number of shareholders who wanted to sell were not going to get their forms back in time", he said.

The extension was the shortest allowed under the Takeovers Code. Farmers who accepted the offer after last week's deadline would be paid by June 21 as with those who had accepted earlier, he said.

Farmers had been under increasing pressure to sell to Rank since Fonterra sold its 50 percent stake in April.

After initially accepting $1.70 per share for its 70 million shares, Fonterra eventually accepted an offer of $1.75.

The increased offer was seen as an attempt to win the support of Dairy Foods' 6200 farmer shareholders, who collectively held the other 70 million shares.

Dairy Foods' brands include Anchor, Fernleaf, Chesdale, Fresh 'n' Fruity, Royal Tasman and Ornelle.

Under the deal, Fonterra has agreed not to build a rival milk factory in the top half of the North Island for three years and a Rank subsidiary, Hollingbourne Holdings, will pay just $1 for the exclusive, free and perpetual use of the trademarks for Anchor, Fernleaf and Chesdale products in New Zealand.

Dairy Foods last year posted a profit after tax of just $900,000 from a revenue of $416.5 million.

A report by investment bankers Cameron and Co said Dairy Foods was worth between $1.75 and $1.98 per share.

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