San Miguel in stalemate

A curious Mexican standoff between Fonterra and several large National Foods shareholders has forced San Miguel to extend its offer for the Australian dairy company.

Fonterra is sticking to its guns on a decision to sell its 19.9 per cent stake in National Foods only when San Miguel's takeover offer has attracted 50 per cent acceptances.

Five weeks after Fonterra pulled out of a bidding war with the Filipino brewer, it has attracted acceptances for only a third of National Foods' shares. It appears several other big institutional shareholders are also taking a wait-and-see approach.

Across the Tasman, the stalemate has prompted speculation that San Miguel may have to sweeten its offer further.

By not taking the cash, Fonterra risks missing out on interest payments worth hundreds of thousands of dollars a week. San Miguel's new deadline for the close of the A$6.40 offer is June 2.

Fonterra, it seems, is not about to sell while there is even an outside chance that the takeover may fail. Chief executive Andrew Ferrier said last week that he was well aware of the situation and that it was best to be prepared for whatever "curveball' might come along.