Board recommends San Miguel offer

10 Feb, 2005 07:00 PM

THE BOARD of National Foods Ltd have lent their support to a takeover bid for the Australian diary company by Philippine brewing giant San Miguel.

The National Foods board has released its Target Statement in response to San MiguelÕs takeover offer, unanimously recommending it to shareholders in the absence of a superior proposal.

The board provided five reasons why it believes shareholders should accept the offer.

- The offer is within 2pc of the boardÕs valuation range for National Foods.

- The premiums represented by the offer are generally consistent with the range of typical control premiums paid in Australia.

- The offer represents a significant premium to the $5.45 per share offer by Fonterra.

- It is possible National FoodsÕ share price might fall below current levels in the absence of the offer or any superior proposal.

- The Board considers that the conditions on the offer will be satisfied in the absence of a superior proposal.

National Foods chairman David Crawford said National Foods paid a 10 cent per share dividend on January 31, which has been covered in a letter to shareholders.

ÒUnder the terms of the San Miguel offer, the offer price of $6 per share has been adjusted by the amount of this interim dividend,Ó Mr Crawford said.

Fonterra has confirmed that National Foods has agreed to provide it with certain non-public information.

Fonterra Chief Executive Officer, Andrew Ferrier, said Fonterra would like greater clarity on the assumptions that underpin the National Foods boardÕs valuation before making any final decisions about its offer.

ÒAs part of this process, we need a more detailed understanding of various aspects of National FoodsÕ business,Ó Mr Ferrier said.

ÒWe are taking the necessary time to fully research and evaluate these matters so we can be comfortable that we are making decisions that create value for our shareholders.

ÒAs we have said before, it makes good strategic sense for us to grow our Australian consumer foods business by entering the national chilled milk market and the yoghurts segment through National Foods, complementing our leading positions in cheese and spreads.

ÒHowever, I emphasise that we will do so only on a basis which we are convinced is in the best interest of our shareholders.Ó

Fonterra has also extended its offer period for the third time with the new closing date being March 8.

The San Miguel offer closes on March 18.


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