Australia's National Foods Rejects Fonterra Takeover -2- MELBOURNE (Dow Jones)--Australia's National Foods Ltd. (NFD.AU) on Thursday rejected a takeover bid from New Zealand dairy group Fonterra Co-operative Group Ltd. (FCO.YY), its biggest shareholder.
Earlier Thursday, Fonterra said it was offering A$5.45 a share in cash for National Foods, valuing it at A$1.62 billion. It already holds about 19% of the stock.
National Foods said the board agrees the Fonterra bid undervalues the company, adding that the control premium is "grossly inadequate."
The Melbourne-based company said the unsolicited offer is too low, "given its financial track record and strong earnings prospects."
Further, National Foods said the conditional offer takes no account of the substantial strategic and synergy benefits that would be extracted from the proposed acquisition.
It didn't say what the company should be valued at on a per-share basis.
"The board considers the control premium to be grossly inadequate given National Foods' strong earnings prospects and strategic value to Fonterra," it said in a statement.
Earlier Thursday, Fonterra described its cash offer for National Foods as "full" and "generous."
Meantime, National Foods added it is continuing to review "strategic alternatives," including a potential merger with local foods company SPC Ardmona Ltd. (SPC.AU)
"These alternatives will only be pursued if the board unequivocally believes the implementation of such an alternative will maximize value for National Foods' shareholders," it said.
National Foods confirmed it has hired UBS as financial adviser.
