October 31, 2013 / 9:49 AM / in 4 years

NZ's Fonterra wades into Warrnambool battle, seeks Bega stake

SYDNEY, Oct 31 (Reuters) - New Zealand dairy giant Fonterra Co-operative Group is building up a 10 percent stake in Bega Cheese Ltd, two people close to the transactions told Reuters, a move seen linked to an international battle for Warrnambool Cheese and Butter Factory Company Holdings Ltd (WCB).

Fonterra has tasked Goldman Sachs with offering Bega shareholders A$4.95 ($4.70) per share, a 12 percent premium to the stock’s close at A$4.41 on Thursday, one of the sources said.

Bega is one of WCB’s biggest shareholders. It kicked off the bidding war for WCB in September, but its offer has since been trumped by fellow shareholder Murray Goulburn Co-operative Co Ltd and by Canada’s Saputo Inc.

Saputo’s top bid of A$8 per share values WCB at A$449 million ($426 million).

Fonterra had been viewed as a potential bidder for WCB, which has attracted global interest, highlighting the strong demand for Australian dairy assets and their exposure to rapidly growing Asian markets.

One of the sources said Fonterra’s off-market purchase of Bega was not a precursor to a “follow on offer”. Both sources declined to be identified as the share purchase was still in process, and Fonterra and Goldman Sachs declined to comment.

Fonterra’s bid to buy into Bega comes days after Japan’s Kirin Holdings Co Ltd bought a 10 percent, king-making stake in WCB.

Bega owns about 18 percent of WCB and Murray Goulburn owns 17 percent. If the two banded together with Kirin, they would have just shy of 50 percent, enabling the group to block Saputo’s bid.

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