Fonterra dismisses takeover speculation

Share prices for National Foods - Australia's only listed dairy company - surged to record highs yesterday amid speculation New Zealand co-operative Fonterra was preparing to launch a takeover.

But Fonterra, the world's biggest dairy exporter, said it had no plan at present to increase its 18 per cent stake.

Shares of National Foods, which supplies about 40 per cent of Australia's fresh milk, surged as much as 5.6 per cent to the highest level in at least 10 years on speculation Fonterra may announce a takeover offer this week.

One analyst said he had spoken with clients yesterday who had told him of a takeover bid price of around A$4.50 ($5.20).

A dairy farmer said people within the industry began hearing the rumours.

"Given Fonterra has around an 18 per cent stake in National Foods, if they are going to make any further moves it would have to be for a takeover," the farmer told the Sun-Herald.

Fonterra spokesman Gareth Johnstone said yesterday: "There's no foundation to the rumour. Fonterra is comfortable with its current stake in National Foods."

By mid-afternoon, shares of Melbourne-based National Foods rose as much as 22Ac to A$4.17 on the Australian Stock Exchange. The shares pared gains after the Fonterra comment was reported.

National Foods spokesman Ian Greenshields declined to comment on the speculation and said the company knew no reason for the increase in its stock price.

"We have no idea. We have heard the same rumour as you have."

New Fonterra chief Andrew Ferrier said last week the group was getting ready to make a play in the Australian market.

"You would probably see some activity from us within a year, possibly sooner," Ferrier told the Australian newspaper.

National Foods generates nearly A$2 billion in revenue, supplies about 40 per cent of Australia's fresh milk through brands like Pura and makes Yoplait yoghurt.

- NZPA