THE takeover battle for Warrnambool Cheese and Butter (WCB) has been further complicated after Fonterra bought a six per cent stake in Bega Cheese.
In a move designed to protect Fonterra’s cheese supply, the New Zealand co-operative bought 9.3 million shares on Thursday at $4.95 per share, costing the company $46 million.
The shares were purchased in an overnight transaction through a special off-market crossing sale.
The purchase achieves the first part of a reported ambition by Fonterra to gain a 10 per cent stake in Bega, the purchase being brokered by Goldman Sachs.
A stake of 10 per cent would give Fonterra a blocking holding that would prevent Bega becoming a takeover target.
A present Bega is one of three companies involved in a takeover tussle for WCB, but recent manoeuvring by rival processors hint that it could itself become a takeover target.
Fonterra licences the Bega brand and has a substantial cheese supply contract with the company.
Fonterra chief executive Theo Spierings said Australia was an important market for Fonterra and the company was committed to increasing its presence.
“There has already been a lot of consolidation activity in the Australian dairy industry,” Mr Spierings said.
‘‘It is important that Fonterra participates and we have confidence in Bega and the strategy it is pursuing.”
Bega was given the all clear by the Australian Competition and Consumer Commission on Thursday to pursue its takeover bid.
Its rivals in the takeover battle, Murray Goulburn and Canadian-owned Saputo have yet to get the go-ahead.
Murray Goulburn has yet to have its application considered by the Australian Competition Tribunal and the bidding leader Saputo has yet to receive approval from the Foreign Investment Review Board.
Fonterra’s supply-protection manoeuvre followed a similar move by Japanese-owned Lion on WCB. Lion’s entire supply of Coon and Cracker Barrel cheese is manufactured by WBC. The company spent $52 million on Tuesday buying a blocking holding of 9.9 per cent of WCB, protecting the Allansford processor from a full takeover and protecting its supply contracts.
The purchases of these holdings puts both WCB and Bega out of contention for full takeover by the present bidders.