Dairy Foods Board Negotiates Increased Rank Offer

Wednesday 24 April 2002

New Zealand Dairy Foods Board Negotiates Increased Rank Offer And Recommends Sell To Farmer Shareholders
(Statement by John D Storey, Chairman New Zealand Dairy Foods)

The Directors of New Zealand Dairy Foods have been successful in negotiating an increased offer from Rank Group of $1.75 per share. This is 5c higher than the price Fonterra agreed to accept for its 50% share in the company.

Directors will also be recommending to shareholders that they accept Rank’s offer.

After discussions and negotiations, Rank has agreed to increase its offer to $1.75. Based on this increased offer and a number of other not insignificant factors, the Board has made the unanimous decision to recommend that farmer shareholders sell. We are pleased that Rank has increased this offer which better recognises the worth of the company and reflects the commitment of the New Zealand Dairy Foods Board to ensure farmer shareholders receive an acceptable offer.

New Zealand Dairy Foods had intended to communicate this news firstly with Shareholders before making any public announcements. However, because Fonterra has now gone into the public domain the Board believe it is appropriate to issue this statement.

The Board has indicated that Directors who have shares that they own or control in New Zealand Dairy Foods will be accepting the offer for these shares.

In accepting Rank’s offer, Fonterra has made it clear it believed $1.70 was the best price that could be obtained, and that acceptance at that price was in its best interests. However the Directors were not comfortable with the offer price being below the price range advised by Cameron & Co, particularly in light of the strong recovery made by New Zealand Dairy Foods in the past 12 months. We made that point to Rank.

Rank is buying into a well-managed and performing company.

The decision by Rank to increase its offer price, admittedly to the bottom of the range, is seen as positive, and shareholders can have a level of confidence that the price now being offered is acceptable.

Directors believe that a successful New Zealand Dairy Foods is important for dairy farmers and that Rank will be a good shareholder for New Zealand Dairy Foods. It is an experienced operator in the food industry, and is a major New Zealand corporate.

A full statement from the Board as to its reasons for recommending acceptance, and a summary of the independent report from Cameron and Co, is due to be released to Shareholders early next week.

Ends

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