Independent expert supports National Foods proposal

Posted by James Ferre on 17th October 2008

Australian Co-operative Foods Limited (ACF), which trades as Dairy Farmers, has announced that an independent expert has determined the National Foods proposal to acquire the Co-operative to be in the best interests of its members in the absence of a superior proposal.

National Foods won the race for the Australian dairy co-operative (pending a shareholder vote) with a $910 million offer in August.

ACF Chairman Ian Langdon said that the National Foods proposal – which would deliver members $5.65 per share – was in the upper half of the independent expert’s valuation range of between $5.25 and $5.89 per ACF share.

“Following the ACF Directors’ unanimous recommendation of the National Foods proposal in August 2008, independent expert, Grant Samuel & Associates, has found it to be in the best interests of the Co-operative’s members in the absence of a superior proposal,” Mr Langdon said. “The independent expert also acknowledges in its report that ACF has undertaken a rigorous and thorough competitive sale process, which culminated in the announcement that National Foods had submitted the most attractive offer.”

ACF Chief Executive Rob Gordon said Grant Samuel & Associates’ valuation of ACF took into account the historical financial performance of the Co-operative – including its extensive restructuring – and a significant increase in targeted earnings in the 2009 financial year.

“It also reflects the strength of ACF’s portfolio of leading brands and market positions across the key dairy categories, the strategic attractiveness of the Co-operative to potential acquirers, and the opportunity for substantial cost synergies,” Mr Gordon said.

“According to the independent expert’s report, the consideration under the National Foods proposal represents relatively high multiples of earnings for ACF and provides ACF members with certain cash consideration that reflects the strategic value of ACF to National Foods and the substantial synergies that are expected to be generated.”

The results of a shareholder vote regarding the proposed takeover are expected to be released in late November.