Frucor seeks new offer to beat Danone

By ELLEN READ markets writer

Takeover target Frucor Beverages has appointed investment bank Credit Suisse First Boston to solicit a counter bid to last week's offer from French giant Danone.

Danone's Asia unit is offering $2.35 a share for 100 per cent of Frucor, valuing the company at $294 million.

Frucor shares have risen sharply since the offer, closing yesterday at $2.44 after hitting a high of $2.47 last week.

A counter bid would create an auction for Frucor, increasing the chance of a higher price for existing shareholders.

Brokers have said the Danone bid appears to undervalue the company. Some analysts recommend that shareholders hold their stakes for the time being.

Frucor has also appointed a committee of independent directors to advise shareholders and noteholders on the Danone offer.

Ian Donald will chair the committee, on which Graham Evans and Peter Bush will sit.

The committee has commissioned Grant Samuel & Associates to prepare an independent appraisal of the Danone offer.

Frucor will hold its annual meeting today and although the company is not commenting publicly on the Danone offer, questions are expected from shareholders.

"We will not be commenting on the merits of the offer until we are in receipt of the Grant Samuel report," Mr Donald said yesterday.

"Once we have analysed the findings of the report, we will make a recommendation to shareholders and noteholders."

Under the terms of the Danone bid, the earliest date for its $2.35-a-share offer to be sent to shareholders is November 7.

If that happens, the earliest date for the offer to close is in the first week of next month.

Frucor manufactures and sells V energy drink as well as bottled water, soft drinks, fruit juices and "new-age" drinks in New Zealand, Australia, South Africa and Britain.

It made a net profit of $11.7 million for the June year after lowering its profit expectations because of problems launching V in Britain.

The company listed in June last year at $1.54 after the shares were issued at $1.50 each.