Lactalis has applied to the ACCC to buy Fonterra’s Mainland, in a further sign the French dairy giant is in pursuit.
Lactalis has applied to the Australian Competition & Consumer Commission to buy Fonterra’s Mainland Group, in a further sign that the French dairy giant is in pursuit.
Fonterra is said to be appealing against a court ruling that failed to provide clarity on Bega’s legal rights over its commercial agreement with the New Zealand-based dairy giant to sell products with the Bega brand.
The ACCC is seeking feedback on the acquisition by Lactalis, seen as the frontrunner to buy the $2bn-plus Fonterra spin-off Mainland.
Lactalis is pursuing the business as a whole, rather than just the Australia and New Zealand operations like rival suitor Bega, and Fonterra wants a clean deal that involves a sale of all the assets together.
Bega has not been given access to the data room by Fonterra because it refuses to waive what it believes is its rights to stop a change of control of its trademark licencing agreements that are currently held by Fonterra.
A deal with Bega could be challenging to get past the ACCC, but the Australian-listed group is seen as the buyer to pay the most for Fonterra’s local Mainland arm, which sells brands such as Western Star butter and Perfect Italiano cheese, because it can extract synergies.
Some market experts say Lactalis could offer one price for the business if clarification around the legal situation cannot be ironed out, but a higher price if there’s no risk to losing the Bega brand licence.
With the Bega licenced products accounting for about 6 per cent of annual Mainland sales of $NZ4.9bn ($4.5bn), it is seen as critical to the business and a must have for any buyer.
The ACCC said Lactalis was proposing to acquire Fonterra’s global consumer business and ingredient and food service businesses in Australia.
“Lactalis and Fonterra overlap in milk acquisition, milk processing and dairy product production,” it said.
“Both also engage in the wholesale supply of dairy ingredients and dairy products to food service businesses in Australia and the wholesale supply of cheese, chilled yellow spreads and cream to retailers in Australia and for export.”
Mainland also includes an ingredients business in New Zealand, a Southeast Asia food service business and a Middle East consumer business.
Working as an adviser to Lactalis is Rothschild.
The sale contest, run by Craigs, Jarden and JPMorgan, is in the early stages of the second round.
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