12 Apr 2005

Fonterra has conceded defeat in its attempt to secure National Foods as a key distribution channel into the Australian diary market, trumped by a $65 million bid from San Miguel.

Fonterra will now sell its 19% stake in National Foods and walk away with a $226 Million profit. Fonterra, happy to take the profit, will be looking to invest in other dairy assets in New Zealand, Australia and elsewhere.

2 March 2005 This week Fonterra has raised its takeover offer from $A5.45 to $A6.20 by re-engaging in a bidding war with San Miguel (a Phillipines brewing and food group) for control of National Foods, an Australian diary company.

Chief Executive Andrew Ferrier said Fonterra has had taken the opportunity to complete due diligence on National Foods. The future of Fonterra's consumer brands strategy in New Zealand and Australia is at stake as National Foods opens Fonterra up to many valuable strategic opportunities, especially in respect to securing product distribution within the Australian market. Additional to this, Fonterra has confirmed that Yoplait has agreed to support National Foods under Fonterra ownership and if Fonterra gains a 100% stake in the company, then it will create an opportunity for Fonterra and Yoplait to develop their relationsip by engaging in discussions about possible joint ventures in both Australia and New Zealand.

Fonterra seems to have its eye on the possible business trends that will develop in the future especially since the Australian and New Zealand Governments introduced a single economic market agenda last year which aims to create a "seamless" business market across both countries.

New Zealand is Australia's fourth-largest market and Australia is New Zealand's largest.

Australia is the biggest investor in New Zealand and New Zealand is the sixth biggest across the Tasman.

Fonterra is already a major shareholder in National Foods but is seeking further control. Its current offer is conditional on a 90% acceptance by remaining shareholders. San Miguel offer is due to close on March 18th.