SMC now holds over 90% of Australia’s Nat’l Foods

Having reached the threshold of 90 percent acceptances, food and beverage giant San Miguel Corp. is moving closer to the compulsory acquisition of the remaining shares of Australian dairy group National Foods Ltd.

In a disclosure to the Australian Stock Exchange, San Miguel said it now holds 90.13 percent of National Foods, which owns a range of leading consumer brands such as Pura fresh milk, King Island cheeses, and Yoplait yoghurts.

The company offered A$6.40 a share for National Foods, topping New Zealand’s Fonterra Cooperative Group Ltd. in a battle for Australia’s largest producer of fresh dairy products.

Under Australian takeover law, San Miguel can compulsorily acquire the remaining shares when it gets at least 90 percent of National Foods.

The acquisition of National Foods gives San Miguel a major foothold in Australia’s growing A$11.7-billion dairy market.

Based on latest industry figures, National Foods has an estimated 41- percent share of the country’s fresh milk market and almost half of flavored milk sales. It also has more than 20 percent of the cheese and yoghurt markets.

National Foods competes with New South Wales Dairy Farmers, Parmalat Australia and Switzerland-based Nestle SA.

San Miguel’s acquisition of National Foods would be financed primarily with new debt. A group of banks earlier agreed to extend up to $1.85 billion in loan to the food and beverage conglomerate.

The purchase of National Foods would increase San Miguel’s exposure to the Australian dairy goods market. It already owns a number of assets in Australia, including the Berri fruit juice operations, and brewer James Boag and Son.

San Miguel said National Foods fitted the Filipino group’s strategy of expanding its presence in the beverage and food businesses in the Asia-Pacific region.

The acquisition would likewise provide access to dairy raw material and make available a wide range of products to its customers with the focus on the branded segment. National Foods would also get access to the Asian dairy market through San Miguel.

San Miguel’s takeover bid represents the latest move in the conglomerate’s long-term strategy of increasing its non-alcoholic beverage and food holdings. In the past year it has bought a Thai brewery, drinks and hog farm assets in Vietnam, and expanded into Singapore coffee and ice-cream businesses.

The San Miguel group also acknowledged that it is considering an offer for New Zealand Dairy Foods –estimated to be worth at least A$644 million, but it has yet to make a formal bid.