'Ultra-marathon' takeover tussle turns into extra costs for National Foods

MELBOURNE - The takeover battle between dairy co-operative Fonterra and Philippines food and beverage group San Miguel for National Foods has turned into an "ultra-marathon", according to the target company's chief executive.

Peter Margin, handing down National Foods' half-year results yesterday, said the dairy producer's costs could pass the A$15 million ($16.51 million) it originally estimated when the takeover was launched four months ago.

The company said it remained on track to achieve a net profit of at least A$78 million in 2004-05 despite a fall in first half earnings.

National Foods reported a net profit of A$29.3 million for the six months to December 31, 2004, down 13 per cent on the previous first half.

It had to strip out A$13.9 million in costs associated with the takeover.

"We assumed no more than A$15 million collectively but depending on how long this goes, it might go north of that," Margin said.

Fonterra was given access to unpublished information on National Foods two weeks ago as it continued due diligence but has yet to get back to the producer of dairy products such as Pura milk, Big M and Yoplait.

Fonterra started the takeover battle with a A$5.45 per share bid in late October 2004 but was later trumped by San Miguel, which came in with a A$6 bid that has been recommended by the National Foods board.

"We didn't expect this would be going for four months - it's turned into an ultra-marathon," Margin said.

Fonterra has twice extended its bid as it weighs up its next move and the new deadline is next Tuesday, when the dairy giant either has to revise its offer or once again extend the bid.

"We have to wait and see; we have had no further advice from them [in the past two weeks]," said Margin.

"The last time I spoke to them they still seemed reasonably positive about the business."

Margin said the expected 2005 financial year profit of at least A$78 million was an increase of 14 per cent for the same time last year.

- AAP