Threats to Fonterra's dairy dominance plan

Goodman Fielder could present a serious threat to Fonterra's plans for dairy dominance in Australia, new chief executive Peter Margin said yesterday.

Margin is the former boss at National Foods, the Australian dairy company that rebuffed Fonterra's takeover advances this year.

Talking up his growth plans for Goodman Fielder on a pre-float roadshow, Margin said the company would be in a position to look at buying major Australian dairy companies Dairy Farmers or Parmalat if and when they came up for sale.

Fonterra has committed to being the number one dairy player in Australasia and has already expressed an interest in Dairy Farmers, a co-operative that has plans to list in the next 18 months.

Burns Philp chairman Graeme Hart supported Margin, saying that as a major shareholder in Goodman he would be prepared to see it happen.

He said it was the sort of thing that could be funded by issuing more stock rather than leveraging the company up with extra debt.

Margin ruled out any incremental expansion of Goodman's well-established New Zealand dairy business into Australia.

He said until the big players in that market consolidated, it did not make sense to launch more dairy brands there.

In the meantime, Goodman was geared up to look at acquisitions across the food sector - probably up to A$300 million.

It also planned to relaunch the popular New Zealand Vogel's bread brand in Australia.

The Goodman Fielder team held a briefing for brokers and fund managers, many of whom have expressed little enthusiasm for the food group - which dual lists on the ASX and NZX on December 19.

Hart wasn't buying talk that there was a lack of institutional interest in the float.

"I'm expecting that institutional investors - once they've finished talking the price down - will recognise the attributes of the business," he said.

Margin talked up the New Zealand division which - with the New Zealand Dairy Food assets - will be Goodman Fielder's biggest, with sales of A$836 million.