Fonterra does not rule out higher offer for National Foods

1.25pm

Fonterra Cooperative Group Ltd says it does not want to limit its options on the price it has offered for Australia's National Foods Ltd.

"We believe that our offer, including its reasonable conditions, is generous and that shareholders will conclude that it represents their best outcome," a spokesman for the cooperative said in statement today.

"However, we do not intend to limit any of our options.

"We reserve our right to vary any terms of the offer if that were something we wished to do," he said.

The Fonterra spokesman said a report in Wellington's Dominion Post newspaper had "misinterpreted" comments Fonterra chief executive Andrew Ferrier made yesterday at the Wellington Chamber of Commerce, when it suggested he had ruled out certain options in relation to the bid.

The newspaper today reported that in comments made after his speech, Mr Ferrier was adamant the offer would not be lifted.

"I am not going to budge," it quoted him as saying. "We really think that...there aren't alternatives that would be more attractive than us valuing the business at this level."

Fonterra today issued a statement saying it regarded its offer of A$5.45 ($6.03) per National Foods share as generous and full.

Mr Ferrier said in the statement: "Comparing our offer with market multiples and transaction multiples provides the best objective basis of assessment.

"Our offer is at a 2005e cash price/earnings (ratio) of 19.6, which significantly exceeds the comparable ASX 200 multiple of 13.2, global dairy companies at 9.9, Australian branded food and beverage company multiples at 16.0 and selected global branded food companies at 14.5.

"Transaction multiples indicate that this is one of the highest priced large deals in this market across dairy and other food categories," Mr Ferrier said.

"It is, on that objective basis, demonstrably generous."

National Foods' corporate affairs executive, Ian Greenshields, has said the company's directors would not talk to Fonterra again until it lifted its bid.

"They would need to put in a higher bid. There's not a lot to talk about at the moment," Mr Greenshields said.

Fonterra owns a 19 per cent stake in National Foods, which it bought in 2000 to get a seat at the table in any consolidation of the Australian daary industry.

Analysts have agreed it is unlikely a rival bidder will emerge, but suggest Fonterra will lift its bid to secure the board approval needed to encourage small investors who own 35 per cent of National Foods to sell out.

- NZPA