That is the question on the lips of the dairy giant's 12,000 plus shareholders' />

Just how much more can Fonterra bid for Australia's National Foods?

That is the question on the lips of the dairy giant's 12,000 plus shareholders now the Philippine brewer San Miguel has made a $2.08 billion counter offer.

Judging by the rise in National Foods' share price to A$6.48 after San Miguel revealed its A$6.40-a-share plan, the market seems to believe at least a little more.

It is all guesswork, of course, but CommSec, the broking arm of the Commonwealth Bank, reckons the New Zealand dairy giant can bid as high as A$7.50 and still be ahead. At this level CommSec reckons the deal will boost earnings by 0.3 per cent.

This is clearly not enough to justify such a risky venture.

But it makes a very important point - Fonterra is not out of the game yet, so a cool head is needed.

The numbers are frightening. If Fonterra replies with a bid of $A6.50, as many expect, it will have to stump up A$1.567 billion in cash. It will also assume National Foods' debt, taking the cost per farmer to just under A$150,000.

The Australian market is littered with New Zealand disasters - from The Warehouse's buy of the Silly Solly's and Clint's Crazy Bargains stores to Air New Zealand's acquisition of Ansett.

Farmers may also have to accept reduced payouts.

If Fonterra bows out, the gain from selling the original 20 per cent stake - the equivalent of $A18,000 per farmer - is hard to ignore.

However, these figures need to be tempered with the fact that Fonterra is becoming more confident about the gains from the takeover.

Fonterra's director of strategy, Graham Stuart, told the Business Herald this year that its most recent bid of A$6.20 would be "earnings accretive from the first year".

This was a sharp turnaround on the position last October when it launched its initial A$5.45 a share bid. Then Stuart said the acquisition would boost earnings after two years.

Finally, the difference between a A$6.50-a-share bid and Fonterra's initial A$5.45 offer boosts the price for full control by 16 per cent. This is a harsh rise over an already rich initial bid, but it is not yet outlandish and CommSec reckons it will boost Fonterra's earning's by 10 per cent.

This is not an argument to support Fonterra every time it raises its bid. But the gains from dominating the Australasian dairy market are enticing. Fonterra will have some explaining to do whatever way the deal falls.