NZ's Fonterra wades into Warrnambool battle, seeks Bega stake

Reuters

SYDNEY, Oct 31 (Reuters) - New Zealand dairy giant FonterraCo-operative Group is building up a 10 percent stakein Bega Cheese Ltd, two people close to thetransactions told Reuters, a move seen linked to aninternational battle for Warrnambool Cheese and Butter FactoryCompany Holdings Ltd (WCB).

Fonterra has tasked Goldman Sachs with offeringBega shareholders A$4.95 ($4.70) per share, a 12 percent premiumto the stock's close at A$4.41 on Thursday, one of the sourcessaid.

Bega is one of WCB's biggest shareholders. It kicked off thebidding war for WCB in September, but its offer has since beentrumped by fellow shareholder Murray Goulburn Co-operative CoLtd and by Canada's Saputo Inc.

Saputo's top bid of A$8 per share values WCB at A$449million ($426 million).

Fonterra had been viewed as a potential bidder for WCB,which has attracted global interest, highlighting the strongdemand for Australian dairy assets and their exposure to rapidlygrowing Asian markets.

One of the sources said Fonterra's off-market purchase ofBega was not a precursor to a "follow on offer". Both sourcesdeclined to be identified as the share purchase was still inprocess, and Fonterra and Goldman Sachs declined to comment.

Fonterra's bid to buy into Bega comes days after Japan'sKirin Holdings Co Ltd bought a 10 percent, king-makingstake in WCB.

Bega owns about 18 percent of WCB and Murray Goulburn owns17 percent. If the two banded together with Kirin, they wouldhave just shy of 50 percent, enabling the group to blockSaputo's bid.

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