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Dairy Trust half way to target of acquiring Open Country

Tuesday 9th September 2008

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Dairy Trust is half way to its goal of acquiring the rest of Open Country Cheese Co. in a transaction aimed at challenging the milk industry dominance of Fonterra Cooperative Group.

Dairy Trust has received acceptances for 9,698,006 shares, representing 25.74% of the shares in Open Country, it said in a statement. In July, it offered NZ$2.75 a share for the 47.6% of Open Country that it didn't already own as part of a deal with Singapore-based agricultural products distributor Olam International.

Dairy Trust plans to help develop dairy processing facilities in the country's four major milk-producing regions, targeting capacity of 1.2 billion litres of milk.

The company is currently 44% owned by meat processor AFFCO Holdings Ltd. After the transaction, AFFCO's stake will reduce to 35.5%, Olam would become second-largest and Talley Group third with 17%.

Shares of Open Country trade on the Unlisted market. It last changed hands on August 25 at NZ$2.73. The shares are offered at NZ$2.70 and bid at just NZ$2.15.

The deal would give Olam a cornerstone holding in Dairy Trust, which is poised to become New Zealand's second-largest dairy processor, Olam said in a statement in July. Olam would also enter into a long-term marketing agreement for an escalating percentage of Dairy Trust's production, it said.

Fonterra, the world's largest diary products exporter, processes more than 90% of milk produced in New Zealand, and Dairy Trust is the only rival with plans to compete in milk processing on a national scale, the companies said.

By Jonathan Underhill



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