By PHILIPPA STEVENSON
The Dairy Board hopes to cement within three months a $328 million deal for a majority share of Brazil's fifth largest dairy company.
Board chairman Graham Fraser said a deal had been signed for 51 per cent of the Sao Paulo-based Vigor company, subject to due diligence.
The purchase price
of the company, which has annual sales of more than $600 million, would be up to $328 million. The agreement provided for a further $198 million to be contributed as capital within three years. It is subject to approval by Brazil's Commerce Commission.
The deal, understood to have prompted reservations from the board's largest shareholder, New Zealand Dairy Group, is the fourth in a recent series of board mergers and acquisitions.
Within the past year it has signed agreements with Inlaca in Venezuela and Dairy Farmers of America, and also pursued a merger with Bonlac of Australia.
Mr Fraser said the Brazilian contract was in line with the dairy industry's agreed growth strategy.
In Sao Paulo, a city of 20 million, Vigor makes products which include milk, cheese, cultured foods, butter and margarine.
Brazil, with a population of 165 million, is the largest economy in Latin America and has a dairy market of more than $11 billion, the second largest in the Western Hemisphere.
