Kirin may make bid for Australia's Dairy Farmers

Kirin Holdings Co, Japan's biggest beverage maker, may bid for Australian milk processor Dairy Farmers to build on its dairy business in the country, President Kazuyasu Kato said.

Dairy Farmers, Australia's third-largest milk processor based in Sydney, will make a recommendation to its farmer shareholders on whether to pursue a trade sale, merger or stock- exchange listing after reviewing options this year.

"We're keeping Dairy Farmers in mind," Kato said in an interview at Kirin's Tokyo headquarters. "A partner that will allow us to efficiently take part in Australia's dairy industry, as it reorganizes and take advantage of economies of scale, is a very important strategy for growth."

Kirin agreed to buy National Foods, Australia's biggest dairy and juice maker, for 220 billion yen ($2.03 billion) in November as sales dwindle for its main beer business in Japan. Adding Dairy Farmers, which owns brands including Ski yogurt and Coon cheese, would give it more than a half share of the nation's market for milk and dairy products.

Kirin may have to compete with France's Groupe Danone SA, Italy's Parmalat SpA and Australia's Coca-Cola Amatil Ltd for the company worth about A$1 billion ($919 million), the Australian Financial Review said on Feb 7.

Kirin shares gained 8 yen, or 0.5 percent, to 1,738 yen as of 12:47 pm on the Tokyo Stock Exchange.

Dairy Farmers is Australia's No 2 dairy company by fresh milk sales with an annual capacity of about 1 billion liters.

Closing units

The cooperative, owned by its 2,000 farmer suppliers, in 2005 began reviewing its operations, closing unprofitable units and cutting staff as it prepared for a possible share offering or trade sale.

"There is very significant interest in us from domestic and international players," Chief Executive Officer Rob Gordon said on Feb 6. "There are a range of options available to us to evaluate and we are not discounting any of them at this stage."

Profit rose to A$11.2 million in the six months ended Dec 31, from A$100,000 a year earlier. Sales rose 14 percent to A$654.2 million.

"There is no mistake that Dairy Farmers would be a very good partner with a quality product lineup," Kato said.

Kirin bought National Foods from San Miguel Corp to gain brands including Berri juice, Pura milk and King Island Dairy.

Japanese beer companies are facing falling domestic beer sales as the country's population ages and younger consumers switch to wine and other beverages. Total beer shipments fell 0.3 percent last year to the lowest level in at least 15 years.

Dairy Farmers was set up by 65 stakeholders in the Illawarra region in New South Wales state in 1900.

Agencies

(China Daily 02/20/2008 page16)