Shares in NSW cheese maker Bega have surged to a record high after the world's biggest dairy exporter Fonterra bought a six per cent stake in it.
The New Zealand-based giant is expected to continue its buy-up of Bega shares, but the century-old NSW company has a 10 per cent shareholder cap.
Fonterra Co-operative Group announced on Friday it had bought a six per cent stake in Bega, paying $4.95 a share, or a 12 per cent premium on Bega's Thursday closing price.
The news of Fonterra's $46 million share buy-up sent Bega shares to a record high of $4.94 as the Australian market opened at 1000 AEST, marking a 12 per cent rise or 53 cents.
Fonterra already licenses the Bega brand and has a cheese supply contract with the Australian company.
It is looking to build a 10 per cent stake in Bega, hiring Goldman Sachs to broker the deal, media reports say.
The acquisition comes as Bega is embroiled in a takeover battle for Warrnambool Cheese and Butter.
Bega owns about 18 per cent of WCB, having offered $A7.29 in cash and scrip for the Victorian dairy producer.
Fellow WCB shareholder Murray Goulburn Co-operative has offered $7.50 a share, and both have been trumped by Canada's Saputo bid of $8, which has won backing from WCB's board.
Japan's Kirin is complicating the takeover tussle further, buying a 10 per cent stake in Warrnambool through its Lion subsidiary earlier this week.
"There has recently been a lot of consolidation in the Australia dairy industry," Fonterra chief executive Theo Spierings said.
"It's important that Fonterra participates and we have confidence in Bega and the strategy it is pursuing."
