Dairy Buyout Blessing Sought
By JANES, Andrew
NATIONAL FOODS has notified Australian competition authorities of its intention to buy Dairy Farmers as the Australian co-op gets close to short-listing four to six bidders.
BusinessDay understands that Dairy Farmers received about 12 initial bids, including one from Fonterra, and will short-list between four and six parties by early May.
On Thursday, National Foods, owned by Japanese food and beverages giant Kirin, requested that the Australian Competition and Consumer Commission indicate whether it had any concerns that would need to be overcome before its bid to acquire Dairy Farmers was assessed by the co- op’s board.
The commission has started a review of the bid and has said it will take a minimum of eight weeks before issuing preliminary findings.
Other bidders with significant Australian operations, including Fonterra, will also need to get commission clearances.
Apart from National Foods and Fonterra other companies thought to have lodged initial bids include Goodman Fielder, Australian dairy co-op Murray Goulburn, Italian dairy company Parmalat, Canadian dairy processor Saputo and Singapore’s Olam International.
Australian dairy industry analyst Steve Spencer of Fresh Logic said he thought bids would be in the range of nine to 11 times Dairy Farmers’ earnings before interest and tax, implying a price of around A$600 million (NZ$712 million) to A$800 million.
“It’s going to be influenced by what a buyer perceives the growth in that earnings line to be,” he said.
Other industry sources said the price could be higher, pointing out that Kirin paid a multiple of around 16 times earnings when it bought National Foods in November for A$2.15 billion.
An Australian newspaper website was reporting yesterday that there was speculation that National Foods made an A$900 million initial bid for Dairy Farmers.
If National Foods was successful in buying Dairy Farmers, it would give Kirin control of more than half of Australia’s milk and dairy market.
Dairy Farmers has around 2000 farmer-shareholders and is a major fresh milk supplier with popular cheese and yoghurt brands. Strategically it would be a good fit for Fonterra, which has talked in the past about wanting to increase its fresh milk presence in Australia.
BusinessDay understands Fonterra and Dairy Farmers had been in exclusive talks, with the aim of combining the two co-ops, but these broke down last year with Dairy Farmers deciding to run a competitive process.
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