San Miguel drags out dairy bid battle with Fonterra

San Miguel - Fonterra's rival bidder in the takeover battle for National Foods - has extended its offer until April 15.

San Miguel had its bid of A$5.90 ($6.32) a share topped by Fonterra last week.

Fonterra is offering A$6 a share for majority control or A$6.20 a share if it gets 100 per cent.

The original San Miguel bid was due to close on March 18 but Australian takeover rules require that any changes to conditions be made a week before the deadline.

Few in the markets expected the Filipino brewer to raise its bid yesterday.

This latest extension will allow time for the Australian Takeovers Panel to consider a San Miguel complaint about technical details in Fonterra's bid.

San Miguel alleges that Fonterra made inadequate disclosure about a possible joint venture with National Foods, Sodima and Yoplait.

Fonterra has said it will consider a joint venture if it acquires all of the shares in the takeover target but has not revealed what such a deal might be worth to the parties involved.

If the panel found against Fonterra, it could be forced to release information that could help San Miguel to decide whether to increase its offer and, if so, by how much.

However, the Takeovers Panel has yet to decide if it will investigate the complaint.

With investors predicting that San Miguel will eventually make a revised bid - and that Fonterra will then be forced to respond - National Foods faces the prospect of the takeover action continuing well into the middle of the year. Fonterra launched its original offer for the listed dairy company last October.

* Fonterra's bid got a small boost yesterday when the Australian Taxation office ruled that National Foods shareholders will be eligible for rollover relief from capital gains tax if they choose Redeemable Preference Shares as payment for their National Foods shares.

Fonterra's offer includes an option for shareholders to accept cash or redeemable preference shares, or a mixture of both.