Fonterra after $85m stake in Aussie firm
MAX MASON AND GEORGIA WILKINS
Australia's ongoing dairy takeover battle has taken a fresh twist with New Zealand heavyweight Fonterra seeking to acquire a 10 per cent stake in Bega Cheese.
The defensive move, valued at more than A$75 million (NZ$85.8m), adds to the intrigue in the three-way fight for control Warranmbool Butter and Cheese, given Bega remains one of the hopeful parties with a live bid on the table for the Victorian producer.
Brokerage Goldman Sachs late Thursday was seeking a 10 per cent stake in Bega on behalf of client Fonterra. The broker was understood to be offering $4.95 for each Bega share. This was a premium the Thursday’s close $4.41.
Analysts said the Fonterra move was aimed at protecting its existing commercial arrangement with Bega. Fonterra effectively leases Bega’s cheese brand with the New Zealand major supplying some products that are processed in Bega’s facilities.
The move is also seen as a way for Fonterra to secure an indirect stake in Warrnambool Cheese and Butter amid the hotly-contested battle over the dairy maker. Bega currently has a 17.9 per cent stake in Warrnambool.
It comes just days after Japanese-owned brewer and dairy company Kirin bought a 10 per cent stake in Warrnambool through its Lion subsidiary, complicating efforts by Bega, Murray Goulburn and Canada’s Saputo to take over the prized dairy group.
The Warrnambool board has unanimously backed an offer by Saputo’s of $8 per share, pending any better offers.
It has so far shunned earlier bids by Bega and Murray Goulburn, both major shareholders in the target.
Bega has offered $2 cash and 1.2 Bega shares, worth $7.29 per Warrnambool share. Murray Goulburn has offered $7.50 per share in cash.
The development came as the Australian Competition and Consumer Commission earlier Thursday gave the green light for Bega’s bid.
In a note to Warrnambool shareholders, Bega said the ACCC would "not object" to its efforts to acquire the company.
ACCC chairman Rod Sims said there was ''limited overlap'' between Bega and Warrnambool Cheese and Butter in relation to the acquisition of raw milk in the dairy region in south west Victoria and areas of northern Victoria.
"The ACCC concluded that a merged Bega and Warrnambool Cheese and Butter would continue to be constrained by other dairy manufacturers that they compete more closely with in the acquisition of raw milk, including Murray Goulburn and Fonterra," he said.
- © Fairfax NZ News