It's decision day for those at the helm of dairy giant Fonterra as the deadline for increasing its takeover offer for Australia's National Foods looms.
Under Australian rules, Fonterra, which already owns 20 per cent of National Foods, must decide by tomorrow if it will increase its so-far-unsuccessful bid of
$5.45 a share.
This is despite the offer being open until February 15.
While the company was last week further scrutinising National Foods books, it has made no comment on the future of its takeover intentions.
The offer was trumped by Philippines food and beverage group San Miguel, which is offering A$6 a share for National Foods.
National Foods has valued itself at between A$6.11 and A$6.65 a share.
Its board upped the pressure on Friday when it unanimously backed San Miguel's offer.
National Foods' shares closed on Friday down 4c at A$6.30.
In order to win the hostile battle, analysts believe Fonterra will have to offer at least A$6.17 a share but say it can afford to pay more than San Miguel because of the expected savings it would make by merging its dairy operations with National Foods.
San Miguel's Australian operations, Tasmanian brewer J Boag & Son and a 50 per cent stake in fruit juice maker Berri, have little in common with National Foods.
Neither company has disclosed the savings they expect.
Fonterra, which makes Mainland cheese and Anchor butter, wants a bigger slice of the A$11 billion ($11.9 billion) dairy market in Australia, where it claims about 14 per cent of dairy sales.
Its 12,000-plus farmer shareholders are nervous about the takeover bid. Some doubt the wisdom of investing heavily in consumer products.
