SAN MIGUEL CORP  UPS  BID  FOR  AUSTRALIA'S  NATIONAL  FOODS  TO  A$1.9B

MANILA, April 7, 2005 (STAR) By Zinnia B. Dela Peńa  -  The battle for control of Australian dairy giant National Foods Ltd. is heating up as San Miguel Corp. (SMC) has raised its bid to A$1.9 billion ($1.4 billion), putting pressure on New Zealand-based rival Fonterra Cooperative Ltd. for a counter offer.

SMC increased its offer to A$6.40 a share or more than eight percent higher than its previous offer of $5.90. It’s new offer is about three percent more than Fonterra’s latest bid of A$6.20 a share, which includes attractive tax rollover benefits.

In a disclosure to the Australian Stock Exchange, National Foods chairman David Crawford said SMC’s bid was towards the top end of the board’s own valuation range of $6.01 to $6.55 per share, and better reflected the value of National Foods’ leading brands, market positions and superior management.

SMC’s latest offer has the unanimous backing of the National Foods board in the absence of a superior proposal.

SMC chairman and chief executive officer Eduardo "Danding" Cojuangco Jr. said the new offer demonstrated his company’s commitment to achieving its long-term strategic objectives.

"The acquisition of National Foods is an important step towards the realization of our ambition to expand our presence in beverages and food in selected countries in the Asia Pacific region," Cojuangco said in a joint statement.

SMC said it is waiving all previous conditions of the earlier offer other than the more than 50 percent minimum acceptance condition.

National Foods said SMC will pay a break fee of A$1.49 million in the event there is a successful competing proposal or any directors change their recommendation.

The new offer is scheduled to close on April 29.

Fonterra, the world’s largest dairy exporter, opened the bidding for National Foods in October and last month, lifted its offer by 65 cents to A$6.00 a share, or A$6.20 if it wins at least 90 percent of the company. Its bid valued National Foods at up to A$1.84 billion.

Fonterra, which already has a 19 percent interest in National Foods, said it is considering its next move after it was trumped by SMC in the takeover fight.

Analysts said while Fonterra may not have the financial clout to continue raising the offer, the Fonterra bid involved tax rollover benefits that would still be attractive to retail shareholders.

National Foods would give either SMC or Fonterra the dominant position in Australia’s A$11 billion dairy market through leading consumer brands such as Pura milk, King Island and Farmers Union cheeses, and Yoplait and Fruche dairy desserts.

UBS AG is National Foods’ financial advisor while ABN Amro is advising SMC. Credit Suisse First Boston is advising Fonterra

Analysts said the tightly-contested takeover battle proves how much both companies desired National Foods.

SMC’s the largest food and beverage group in Southeast Asia and is pursuing ambitious expansion plans.

In the past year, SMC has bought a Thai brewery, drinks and hog farm assets in Vietnam, and expanded into Singapore coffee and ice-cream businesses. In Australia, it bought half of juice maker Berri Ltd.


Reported by: Sol Jose Vanzi

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