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Fonterra Ends National Foods Offer Divests Stake

Fonterra Ends National Foods Offer and Divests Stake

Fonterra announced today that it will end its offer for National Foods and divest its 19 percent shareholding.

Fonterra Chief Executive Andrew Ferrier said that 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.

Fonterra intends to accept San Miguel Corporation’s offer of $6.40 per share, if that offer is unconditional.

Fonterra’s average purchase price for its 56.5 million shares is $2.68. Fonterra received total dividend income of $45.5 million during the period of its investment, which began in October 2000. This represents an annualised compound return to Fonterra’s farmer shareholders of close to 30 percent over the period of the investment.

The $6.40 sale price equals the highest price paid for National Foods shares on the ASX prior to San Miguel’s revised offer of April 6, and is towards the top end of the National Foods Board’s valuation of $6.01 to $6.55.

Mr 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 consistently said that we would only pursue the deal at a price that represented good value for our shareholders,” Mr Ferrier said.

“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.

“We consider Australasia to be our domestic market,” Mr 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.”

National Foods shareholders with any questions about the Fonterra offer can call our shareholder information line on 1800 333 360 (from Australia), 0800 776 646 (from New Zealand) or +612 9278 9259 (from all other countries) between 9am and 5pm Melbourne time.

[* All dollar figures are in Australian currency]

- Ends -

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