Fonterra sits tight on offer

Dairy giant Fonterra says it is confident it will not need to increase its A$5.45 ($6.04) a share offer for National Foods.

"We should never rule out any option but our view is that we've got a very good price on the table," chief executive Andrew Ferrier said in an interview on the Australian Nine Network's Business Sunday programme.

Fonterra's offer, announced on October 28, values National Foods at A$1.62 billion.

Fonterra, the world's largest dairy exporter, owns 19 per cent of the Melbourne-based company.

National Foods, Australia's biggest fresh milk producer, has said shareholders should reject the bid because it undervalues the company.

Gaining National Foods, whose products include Yoplait yogurt and Pura milk, would give Fonterra a 45 per cent share of Australia's fresh milk market and a quarter of the specialty cheese market.

Australia is the world's third- largest dairy exporter.

Rising demand in Japan and Southeast Asia has helped boost global prices of milk products by 25 per cent this year.

Ferrier said there were unlikely to be any other bidders for National Foods.

"If the price got to a level that was unpalatable to Fonterra then Fonterra would move on and do something else," Ferrier said.

"We're not going to get caught in a trap of chasing it at all costs."

If the bid was successful, Fonterra would sell some of its Western Australia milk business to satisfy regulatory concerns.

- BLOOMBERG