spc - +$2.00, page-8

re: spc <<down.25 cents Fonterra bids for National Foods
Oct 28 11:41
Jim Parker


New Zealand dairy giant Fonterra has announced a $1.6 billion cash takeover bid for its Australian rival National Foods in an audacious move aimed at circumventing the target company's own acquisition plans.

In a statement released on the New Zealand Stock Exchange early on Thursday, Fonterra said it would offer A$5.45 a share cash, a rich 16.7 per cent premium to National Foods' closing price on Wednesday.

The offer sent National Foods' share price soaring more than 20 per cent to as high as $5.60 on the Australian Stock Exchange on Thursday.

The offer is conditional on Fonterra gaining more than 50 per cent of the target company and on National Foods not proceeding with its proposed $1.8 billion merger with fellow food manufacturer SPC Ardmona.

"Fonterra is interested in National Foods, not SPC Ardmona," Fonterra chairman Henry van der Heyden said in the statement.
"We believe National Foods' best future lies in a focused dairy consumer business - not by diversifying into non-dairy products which has not proven to be a successful strategy for National Foods in the past."

The Fonterra announcement sent SPC Ardmona's shares tumbling as much as 19 per cent to the levels which prevailed before the merger proposal was unveiled earlier this month. By 1130 AEST, they were down 25¢ at $1.64.

Fonterra is already National Foods' single biggest shareholder, with a stake of 17.2 per cent. It has an agreement to acquire an additional 1.3 per cent, conditional on approval by the Foreign Review Investment Board.

"This generous cash offer provides shareholders with an outstanding opportunity to realise immediately a premium value for their shares," Fonterra said.

The takeover bid had been widely expected after New South Wales dairy cooperative Dairy Farmers quit its 9.2 per cent stake in National Foods last week at an underwritten price of $4.62 a share.

Mr van der Heyden said a takeover of National Foods would meet his company's aim of entering the national chilled milk and yoghurts markets in Australia.

"These are attractive growth categories, with good growth prospects and solid export potential to Asia. The business complements our existing strengths in cheese and spreads in Australia," Mr van der Heyden said.

"This is a full cash offer that represents a unique and compelling opportunity for National Foods' shareholders to realise the best value for their shares now, as opposed to being exposed to the significant risks inherent in National Foods' pursuit of transactions outside of its core business."

Fonterra is one of the largest dairy companies in the world and is the world's biggest dairy exporter.

In Australia, it is one of the largest dairy companies, employing more than 2,000 people. Its Australian businesses generate more than A$1.4 billion per annum in turnover and its brands account for 14 per cent of dairy sales in Australia.

Fonterra's Australian brands including Mainland, Perfect Italiano and Western Star. It sells products under brands including Bega and Cadburys.

Fonterra chief executive Andrew Ferrier said his company had already had a preliminary discussions with the Australian Competition and Consumer Commission about the bid.

He believed the only likely competition issue would be in relation to the milk market in Western Australia, with any merger likely to involve the sale of milk assets in that state.

National Foods has recommended that shareholders take no action in relation to the bid.

"Shareholders are advised to take no action in relation to Fonterra's bid or any document received from Fonterra until they receive the directors' formal recommendation," National Foods said.