Parmalat & Murray Goulburn drop Dairy Farmers bid

Italian dairy giant Parmalat and Australian cooperative Murray Goulburn have dropped their joint bid for Australia’s Dairy Farmers.

Parmalat said that it has ended talks with Murray Goulburn after failing to reach a “mutually satisfactory resolution on terms and conditions.”

The original bid put forward by the groups would have seen the merger of the liquid milk operations of all three companies, while Murray Goulburn would have absorbed the cheese units of Dairy Farmers.

However, Australia’s competition regulator raised a number of concerns over this proposal and the companies have been unable to renegotiate.

In a statement, Dairy Farmers confirmed Parmalat and Murray Goulburn had terminated their consortium.

However, reports have suggested that both companies are looking into the possibility of pursuing separate bids: a move that could make the sale more competitive.

A source familiar with the situation told Dow Jones that Murray Goulburn has been looking to raise capital from its farmer shareholders and has also been in talks with private equity.

Parmalat said that it could neither confirm nor deny that it was mulling launching a solo bid.

The sale of Dairy Farmers has been valued at around $900 million.

Other bidders include Kirin Holdings’ National Foods, which has launched a joint bid with Warrnambool Cheese & Butter Factory. Canadian dairy giant Saputo is also said to be considering a bid, although the company has remained silent on the possibility.

New Zealand dairy group Fonterra pulled out of the running in June after the Australian Competition and Consumer Commission (ACCC) failed to clear the bid. The ACCC has given Fonterra the green light to discuss joining the National Foods consortium.

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