San Miguel makes bid for National Foods
bidding stakes for Australia's National Foods yesterday. The move
falls in line with the company's policy to expand its presence in
other global markets.
The bidding for the National Foods has proved heated, with the New Zealand dairy giant offering AUD5.45 (€3.14) per share. National Foods complained bitterly that the share price was significantly below the current trading price, and then in stepped San Miguel, upping the offer to AUD6.00 per share, an increase of just over ten per cent.
National Foods is said to be happy with the offer and a unanimous executive board has agreed to accept the bid. Now the waiting begins to see whether or not Fonterra will increase its existing offer.
However, analysts believe that the likelihood of bidding continuing is high as Fonterra will have more to gain from the acquisition. National Foods is one of the largest food companies in Australia and the largest milk processor.
As Fonterra's activities concentrate around dairy products - including the Anchor butter brand and Mainland cheese - it is believed that significant production synergies could reap savings of up to AUD$40 million. As San Miguel is not so heavily involved in the dairy sector, analysts say that cost cutting synergies would be less apparent.
At the end of last year San Miguel declared that its future acquisition policy would centre on companies outside the domestic and neighbouring Asian markets in an effort to broaden its geographic reach. The move could be the companies second purchase in Australia during the past six months, following its acquisition of half the shares in Berri, the country's largest fruit juice maker.
San Miguel chairman and CEO, Eduardo Cojuangco said that the move was "highly attractive" for the company, adding, "National Foods is a good strategic fit for the San Miguel, and their management is strongly committed to growing the business. We recognise National Food's strong growth prospects and believe closer links with our existing Australian and Asian operation will create opportunities for both companies."
Both San Miguel and National Foods have been in close talks over the past four weeks. It is now believed that National Foods will wait until the end of the month to see if a counter bid is made.
