Frucor holds out for higher price


Frucor's suitor Danone is best known for its Evian water

By CNN's Geoff Hiscock
Asia business editor

WELLINGTON, New Zealand (CNN) -- Independent directors at New Zealand's largest juice company Frucor Beverages are resisting a takeover bid by French food and beverage group Danone, saying the offer is too low.

Danone this week extended the acceptance date for its $123 million (NZ$294 million) bid for Frucor Beverages by two weeks to December 21.

But Frucor's directors repeated their concern Friday that the offer price of NZ$2.35 (about $0.98) a share was "inadequate" and said a competing bid was still a prospect.

Frucor is New Zealand's largest juice company and was named one the world's 20 best small companies by Forbes magazine last month.

Danone said in a letter to Frucor shareholders that it was disappointed with the stance taken by the independent directors.

Danone warns

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It said the offer was fair value and no alternative offers had yet emerged. It warned that if the bid lapsed, Frucor's share price was likely to fall below Danone's offer price.

Frucor shares traded 2 cents down Friday to NZ$2.35, exactly the same as the Danone offer price.

When Danone launched its bid on October 24, it noted that its offer was 39 percent above Frucor's average share price over the previous three months on the New Zealand Stock Exchange.

Danone, best known for its Evian water, said then that it wanted to develop its Australasian presence and enter the "promising" energy drink segment.

Frucor sells V energy drink and Fresh-Up fruit juice in a number of countries, including New Zealand, Australia, South Africa and the U.K.

It also bought the Australian-based Spring Valley drinks distribution business in January this year.

Option agreement

Frucor's U.S.-based majority shareholder Bain Pacific Associates, which holds a 37.6 interest, has entered into a conditional option agreement with Danone over a 19.9 percent stake at NZ$2.35.

Danone, which is making its offer through its Singapore-based Asia-Pacific holding company Danone Asia, said in its letter to Frucor shareholders that it was relevant to them that Bain was prepared to accept the $2.35 price.

In their response Friday, the Frucor independent directors said they considered Danone to be "one of the strategically attractive owners of Frucor".

"Our concern is simply that its offer price is inadequate," they said.

They also noted that the extension to December 21 made the prospect of a competing bid more feasible.