Fonterra and National Foods discuss joint Dairy Farmers bid

Posted by Daniel Palmer on 30th June 2008

Leading dairy companies Fonterra and National Foods are reportedly discussing the option of a joint bid for Australian dairy co-operative Dairy Farmers. Both companies have already sought ACCC approval for separate bids but a deal between the two is now in the offing.

The idea would likely suit Fonterra as their desire to engage in a bidding war would have been reduced by their recent purchase of Nestlé’s Australian dessert and yoghurt operations. It is rumoured that the NZ dairy giant is keen to gain immediate control of the Ski brand, which is currently owned by Dairy Farmers but due to be transferred to Fonterra via Nestlé in 2012, as they look to heighten their focus on their yoghurt business.

Dairy Farmers Australia has given their approval for the two companies to commence discussion about a joint bid, waiving their confidentiality agreements. Dairy Farmers Chief Executive Rob Gordon suggested that the talks between Fonterra and National Foods were indicative of the strength of interest in the Australian co-op. “As we move through this (sale) process, major local and international dairy players are taking positions and joining forces to increase their capacity to secure Dairy Farmers’ assets and brands,” he advised in a statement.

National Foods Limited and Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB) formally announced their joint interest in pursuing an acquisition of Dairy Farmers back on June 4 and it has been suggested that any deal between National Foods and Fonterra will probably include WCB.

Dairy Farmers, an Australian dairy co-operative owned by a group of about 2000 farmers, put themselves up for sale in March this year. Since then prominent dairy companies Fonterra, National Foods (in conjunction with WCB), and Parmalat (in a joint venture with Murray Goulburn) have outlined their interest and filed applications seeking approval from the ACCC.

The proposed dates for the announcements of the ACCC’s findings are all in July, but if Fonterra and National Foods do decide to make a joint bid then they will need further ACCC approval. National Foods is currently due to be advised on July 3, Fonterra on July 10 and Parmalat and Murray Goulburn on July 17.