Melbourne, Aug 25 - National Foods, owned by Japanese brewer Kirin Holdings, has agreed to buy Australian dairy producer Dairy Farmers for A$910 million ($784 million), the companies said, marking a long-awaited rationalisation of the local dairy industry.
Dairy Farmers said its board would unanimously recommend the offer to its 2,000 farmer shareholders, subject to an independent expert's report.
National Foods owns the Pura Milk and Berri juice brands, while Dairy Farmers makes its own branded milk, Coon cheese and Ski yoghurt.
The deal will help Kirin expand in Australia and diversify its earnings outside beer. It bought National Foods last year, and already owns 46 percent of brewer Lion Nathan Ltd.
"It's pretty pricey, but at the end of the day few would disagree it now gives National Foods more scale (in Australia)," said Deutsche Bank analyst Kristan Walker.
"The Australian assets including Lion Nathan have been one of the major earnings drivers for Kirin, so it looks as though Australia is becoming a more meaningful place of investment for them."
National Foods will pay A$5.65 per share in cash, which it said implied a multiple of 12.8 times fiscal 2008 earnings before interest, tax, depreciation and amortisation.
National Foods, which made the offer with venture partner Warrnambool Cheese and Butter Ltd, has already received competition clearance.
"National Foods has the capability and financial strength to leverage the (Dairy Farmers) acquisition to create new business opportunities domestically and in the vitally important Asian region," Managing Director Ashley Waugh said in a statement.
National Foods beat other bidders including Australian farming cooperative Murray Goulburn and Canadian dairy firm Saputo. New Zealand cooperative Fonterra, Italy's Parmalat and Singapore's Olam earlier quit the bidding.
The National Foods offer needs to win support of 75 percent of Dairy Farmers' shareholders, and also depends on the dairy producer agreeing on revised supply contracts. ($1=A$1.15)