The auction for NSW-based farmer co-op Dairy Farmers is heating
up with New Zealand dairy giant Fonterra becoming the second
company to show a formal interest in bidding.
Fonterra has followed National Foods in asking the Australian
Competition and Consumer Commission (ACCC) whether it would have
any concerns over it bidding for the iconic cooperative.
The ACCC already is considering whether an indicative offer -
thought to be between $A800 and $A900 million - from National Foods
would raise competition issues.
Dairy Farmers was keen to stoke the auction today, saying more
rival bidders may emerge in coming weeks.
"As stated previously, Dairy Farmers Board has requested
interested bidders seek the necessary regulatory clearances,
including ACCC reviews, prior to it formally assessing proposals,"
chief executive Rob Gordon said.
Mr Gordon said any bidder that did not have existing dairy
operations in Australia would not be expected to seek an ACCC
review.
"Such parties may be required to seek Foreign Investment Review
Board (FIRB) approval during coming months," he said.
"Dairy Farmers Board will meticulously assess each of the available
options before it puts a recommendation to its dairy farmer
shareholders."
The co-operative, with 2,300 farmer shareholders, formally put
itself up for sale in March before closing first-round expressions
of interest last month.
The list of further potential bidders includes Italian dairy group
Parmalat and possibly local cooperative Murray Goulburn.
Last week, in a letter the ACC issued to market participants
seeking comment on National Foods, the watchdog noted the food and
milk firm may be prepared to divest some of its milk brands to help
its bid.
National Foods, which is owned by Japanese brewer Kirin, competes
with Dairy Farmers in the white milk market in several
states.
The competition watchdog has set July 3 as the date for its
findings on the National Foods proposal.
By contrast, Fonterra could face potential competition issues
with Dairy Farmers in regard to its cheese brands.
Dairy Farmers adviser Goldman Sachs JBWere is assessing indicative
offers before inviting interested bidders to conduct due diligence
and submit a final bid.
It is believed management presentations to the short-listed bidders
have been taking place.
The ACCC is expected to set out its timeline for considering the
Fonterra bid later today.
