New Zealand dairy giant Fonterra has today (Monday) withdrawn its bid for Australia's National Foods, leaving the way clear for Philippine food and beverage group San Miguel to take over the company.


"We have consistently said that we would only pursue the deal at a price that represented good value for our shareholders," said Fonterra chief executive Andrew Ferrier. The preferred course of action was to complete the acquisition of National Foods, but it was now clear that increasing Fonterra's offer would not be in the best interest of its shareholders, he said.


Fonterra intends to accept San Miguel Corporation's offer of A$6.40 (US$4.95) per share, if that offer is unconditional.


Ferrier said that at this price other growth options in Australia outstripped the National Foods opportunity, so it was time to crystallise a significant profit for Fonterra shareholders.  The proceeds from the sale would be retained to fund these future growth initiatives.


"We have disciplined investment parameters and believe our offer represented full and fair value for National Foods. It would not have been prudent to go any higher," he said.


"We consider Australasia to be our domestic market," Ferrier said. "Our businesses in Australia, which include leading brands such as Mainland and Bega cheeses, Brownes milk and yoghurts, and Connoisseur and Cadbury ice-creams, generate combined revenues of $1.4 billion, and we also process about 16 percent of Australian raw milk.


"Although we had sought a controlling interest in National Foods as part of our wider development strategy for the Australasian market, we have other opportunities for organic growth and potential acquisitions in both our ingredients and brands businesses."