Fonterra Co-operative Group has built a six per cent stake in ASX-listed Bega Cheese, signalling its support in a complex battle for control of third tier players in the Australian dairy industry as it rationalises.
Fonterra already licenses the Bega brand and has a cheese supply contract with the Australian company.
It has bought 9.3 million shares at $A4.95 apiece for a total of $A46 million, it said in a statement. That's a 12 per cent premium to Bega's closing share price on the ASX on Thursday.
Fonterra is looking to build a 10 per cent stake in Bega, hiring Goldman Sachs to broker the deal, according to media reports.
The acquisition comes as Bega is embroiled in a takeover battle for Warrnambool Cheese & 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 $A7.50 a share, and both have been trumped by Canada's Saputo bid of $A8, which has won backing from WCB's board.
Japan's Kirin is complicating the takeover tussle further, buying a 10 per cent stake 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."
Units in the Fonterra Shareholders' Fund, which gives investors exposure to the dairy company's earnings stream, were unchanged at $NZ6.91 on the NZX on Thursday, and have slipped 1.8 per cent this year.
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