The New Zealand Herald

Fonterra rebuffed in Argentina

It is the second knockback for dairy giant after Murray Goulburn bid unsuccessf­ul

- Jamie Gray

Fonterra has walked away empty handed from talks to buy one of Argentina’s leading dairy producers, according to reports from the South American country.

Media in Buenos Aires say that SanCor has been bought by another Argentinia­n agricultur­al firm, Adecoagro.

A report in Argentina’s La Nacion said Fonterra had been outbid by Adecoagro. Fonterra initially offered US$330 million, but Adecoagro offered US$400m, the report said.

However, the Herald understand­s that while Fonterra had been in talks with SanCor, it had not reached the stage of putting forward a formal offer.

A spokesman for Fonterra declined to comment, but chairman John Wilson last year confirmed that the co-op had been in talks with SanCor.

La Nacion said Fonterra had been viewed as the preferred candidate to take over SanCor.

SanCor is one of the leading dairy producers in Argentina, accounting for one fifth of the total production in the country and 90 per cent of the country’s dairy exports.

The co-operative was estimated to be worth between US$200m and US$400m, La Nacion said.

Adecoagro is involved in a range of businesses, including farming crops and other agricultur­al products, dairy operations, sugar, ethanol and energy production and land transforma­tion.

Fonterra already has extensive interests in Latin America.

In Chile, the dairy giant Saprole is Fonterra’s oldest offshore invest- ment, and is the best known corporate brand locally outside of CocaCola.

Fonterra is also a significan­t player in the US$26 billion a year dairy market in Brazil.

SanCor is a dairy farmers cooperativ­e, producing skim milk powder, butter, gouda cheese, edam, and cheddar.

The company was founded in 1938 and is based in Sunchales, Argentina.

It is the second rebuff for Fonterra after last year’s merger proposal put to the financiall­y troubled Australian co-op Murray Goulburn was unsuccessf­ul.

Murray Goulburn’s shareholde­rs this week approved the sale of their co-operative’s operating assets and liabilitie­s to Canada’s Saputo for A$1.31b.

The sale has been cleared by Australia’s competitio­n regulator, the ACCC, on the understand­ing that Saputo would sell Murray Goulburn’s Koroit factory.

It is still to be approved by Australia’s Foreign Investment and Review Board, but it is not expected to meet with any resistance from the regulator.

Saputo produces, markets and distribute­s in Australia and on the internatio­nal market a variety of cheeses, butter and butter blends, milk and cream. The company has Warrnamboo­l cheese and butter in its Australian stable.

Murray Goulburn chief executive Ari Mervis told this week’s meeting of shareholde­rs and unit holders that Saputo was a trusted dairy processor in Australia. “Saputo recognises that in order to run efficient production facilities they need profitable dairy farms and a profitable industry, supported by strong milk prices.”

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