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Home / The Country

Fonterra's advisers due $23m

By RICHARD INDER
11 Mar, 2005 08:17 AM3 mins to read

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Bankers and advisers working with Fonterra on its $2 billion bid for Australia's National Foods will share as much as $23 million for their trouble, the latest documents lodged in the long-running battle reveal.

Investment bank Credit Suisse First Boston and its New Zealand affiliate First NZ Capital are most
likely to pick up the lion's share.

Fonterra said it would finance these transaction costs, like the rest of the buy, with debt. It did not disclose how much of this sum it would recover if it did not succeed.

Fonterra last week lifted its bid for National Foods, maker of Yoplait yoghurt, from A$5.45 a share to A$6 a share to trump a rival offer, now worth A$5.90, from Philippine brewer San Miguel.

The co-operative, already holding a near 20 per cent stake in National Foods, is making its latest offer in two steps. It will offer A$6 a share but lift the payout to A$6.20 if it gets 90 per cent of the shares on issue.

The A$6-a-share bid values National Foods at A$1.78 billion and puts the cost of Fonterra lifting its stake to 50 per cent at about A$550 million. The A$6.20-a-share bid values the company at A$1.84 billion.

As part of the latest offer, Fonterra is giving shareholders the option of accepting payment in the form of redeemable preference shares.

Fonterra chief executive Andrew Ferrier says they may help minimise capital gains tax payments.

"I would urge those National Foods shareholders who might be eligible for capital gains tax rollover relief from the RPS, to properly evaluate how this option may benefit them," Ferrier said yesterday in the documents lodged with the exchange.

As an example, he said shareholders who paid $A3 for their National Foods shares potentially faced a capital gains tax liability of about 78Ac a share if Fonterra's offer was increased to $A6.20 a share.

Ferrier said that by electing to receive RPS, they would be able to defer the payment of this liability for nearly five years.

Fonterra chairman Henry van der Heyden urged shareholders to accept the bid as it represented a premium over the San Miguel offer, was a big leap over the share price before the bid was launched last year, and valued the company very favourably against its international peers.

Fonterra has extended its offer to April 19. San Miguel extended its own bid for National Foods to April 15 on Thursday.

It has complained to Australian regulators that Fonterra has not adequately disclosed details of a possible joint venture between itself and French company Sodima, owner of the Yoplait brand.

Fonterra has indicated it would explore a joint venture if it won control of National Foods, but has not revealed what such a deal might be worth.

Yesterday it said: "The joint venture arrangements are not expected to have a material impact on the net surplus ... available for payout to suppliers."

Shares in National Foods were yesterday unchanged in Australia at $A6.36, well ahead of the offer amid hopes San Miguel will lift its bid too.

Key Dates

April 8: Brewer San Miguel must say whether it will extend or lift its A$5.90 a share bid for National Foods.
April 15: San Miguel's bid closes.
April 19: Fonterra's bid closes.

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