Fonterra has confirmed it is trying to buy Dairy Farmers by requesting regulatory approval to bid for the Australian dairy company.
The New Zealand co-operative has asked the Australian Competition and Consumer Commission to indicate whether it has any concerns that would need to be overcome before a
bid was assessed by the board of Dairy Farmers.
A Fonterra spokeswoman said the company was bound by confidentiality and could not comment on the process.
Fonterra has a global strategy and this month bought out its major partner in Chilean company Soprole for US$201.9 million ($263 million).
A deal for Dairy Farmers could be worth between A$800 million ($985 million) and A$1 billion.
The attempt to buy Dairy Farmers will pit Fonterra against National Foods - the company it had been prepared to pay nearly $2 billion for in 2005 and which was eventually bought by San Miguel.
National Foods, now owned by Japanese brewer Kirin Holdings, put in a similar request to the Australian commission last month.
Dairy Farmers, which is owned by 2000 farmers and processes one billion litres of milk a year, had been planning to float its manufacturing and marketing division but signalled last year it would look at broader options.
In March Dairy Farmers said a formal process was under way to evaluate interest from third parties to buy, merge or enter into a joint venture with the co-operative.
Dairy Farmers chief executive Rob Gordon said other interested parties might initiate similar regulatory clearances. Interested parties are understood to also include Italian dairy firm Parmalat and Canadian operator Saputo.
"Any bidder that does not have existing dairy operations in Australia would not, however, be expected to seek an ACCC review at this point," Gordon said. "Such parties may be required to seek Foreign Investment Review Board approval during coming months."
Gordon said the Dairy Farmers board would meticulously assess each option before putting a recommendation to its dairy farmer shareholders.
