Dairy giant, Fonterra, has acquired a six percent share of Bega Cheese Limited – one of the three companies in a bidding war for another dairy company, Warrnambool Cheese and Butter.
The 9.3 million shares were purchased at $4.95 per share for a total $46 million.
Fonterra chief executive, Theo Spierings said, "Australia is an important market for Fonterra, and we are committed to growing our already strong presence.
"There has recently been a lot of consolidation activity in the Australian dairy industry. It is important that Fonterra participates, and we have confidence in Bega and the strategy it is pursuing."
Judith Swales, managing director, Fonterra Australia said, "We have a longstanding partnership with Bega, and we look forward to continuing to build on that relationship into the future.” Fonterra currently licenses the Bega brand from Bega and has a substantial supply contract for cheese."
There has been a lot of activity in Australia's dairy industry in recent times, with Bega, Murray Goulburn and Canadian processor Saputo all in the running to acquire Warrnambool Cheese and Butter, and earlier this week a 9.99 percent stake of Warrnambool was bought by the Australian subsidiary of Japanese food giant, Kirin.
Yesterday, the Australian Competition and Consumer Commission announced that it won't oppose Bega's proposed acquisition of Warnambool.
"The ACCC considered that there was limited overlap between Bega and Warrnambool Cheese and Butter in relation to the acquisition of raw milk in the dairy region in south west Victoria (and areas of northern Victoria)," ACCC chairman Rod Sims said.
"The ACCC concluded that a merged Bega and Warrnambool Cheese and Butter would continue to be constrained by other dairy manufacturers that they compete more closely with in the acquisition of raw milk, including Murray Goulburn and Fonterra."