Fonterra ups bid for National Foods

Fonterra today upped its offer for Australian dairy company National Foods, in a bid to trump a rival bid by San Miguel Corporation.

Fonterra said in a statement it would increase its offer to A$6.00 ($6.55) per share, from A$5.45 per share. This would increase to A$6.20 per share if it acquired 90 per cent or more of National Foods.

Fonterra said Philippine food and beverage company San Miguel was offering A$5.90 per share, reduced from A$6.00 after National Foods paid a 10c interim dividend on January 31.

Fonterra's offer includes an option for shareholders to accept cash, redeemable preference shares (RPS), or a mixture of both.

The offer of $A6.20 per share values National Foods at $A1.9 billion.

Fonterra is already National Foods' largest shareholder with a 19.02 percent stake in the company.

Fonterra said it would waive all of the conditions of its offer, other than the 50 percent minimum acceptance condition.

Chief executive Andrew Ferrier said Fonterra had assessed the San Miguel offer and completed due diligence on National Foods.

"The due diligence confirmed our assessment that National Foods presents a valuable strategic opportunity for Fonterra. This has enabled us to make this attractive revised offer to National Foods shareholders,'' he said in a statement.

He said if over 90 percent acceptances were received and $6.20 was paid, it would represent a 35 percent premium to National Foods share price on October 27 after accounting for the 10c dividend paid on January 31.

"Fonterra's offer implies an earnings multiple at the upper end of comparable transactions. This clearly illustrates the attractiveness of the opportunity for National Foods shareholders,'' Mr Ferrier said.

Fonterra's offer has been extended to March 29. Shareholders will not pay brokerage on either the cash offer or the RPS offer.

San Miguel's offer is due to close on March 18. National Foods has valued itself at between $A6.11 and $A6.65 a share, and its board has backed San Miguel's offer.

Fonterra also confirmed today that Yoplait had agreed to continue to support National Foods under Fonterra ownership.

Mr Ferrier said if Fonterra gained a 100 percent stake in National Foods, then Fonterra and Yoplait might establish a joint venture in Australia and New Zealand.

- NZPA