THE NEWS WRAP: Dairy war bids spread further as Fonterra raids Bega

The bidding war for Australian dairy assets has taken an unexpected twist, with New Zealand-based dairy giant Fonterra launching an overnight raid on Bega shares.

Overnight, Fonterra purchased 10% of Bega in an after-market share raid.

Bega, in turn, is one of a number of companies bidding for Warrnambool Cheese and Butter, joining Canadian food giant Saputo, Lion and Murray Goulburn.

Lion, Bega and Murray Goulburn currently own 45% of WCB, which they are keen to purchase in a bid to cash in on the growing infant formula market in Asia.

“The key issue is the purchase of milk off farmers; are there enough people wanting to buy their milk?” ACCC chair Rod Sims says.

“Basically Fonterra, Murray Goulburn and Warrnambool buy about one-third of the milk and Bega is quite a small player in that market, so Bega [bidding for WCB] wasn’t such an issue. There is a bigger issue with Murray Goulburn.”

South Korea close to free trade agreement

South Korea is close to agreement on a potential free trade agreement with Australia, following a visit by Foreign Minister Julie Bishop two weeks ago.

According to The Australian, the key sticking point in negotiations was a clause dealing with international arbitration, which the Rudd/Gillard government was unwilling to agree to, but the current government is.

“The new government is taking a different approach, so the hurdle is being removed,” Young-Moo Kim, director-general for FTA negotiation at South Korea’s Ministry of Trade, Industry and Energy, says.

Murdoch says embrace innovation

Rupert Murdoch has urged Australians to embrace the challenges posed by the emergence of a middle class in China through innovation, in a speech to the Lowy Institute.

“While the lack of a huge domestic market presents challenges, it also means we have fewer huge industries demanding the government protections common in large industrial nations – and fatal for any society that hopes to advance in a disruptive world,” Murdoch said.

“The disruptive forces in the world economy today are as relentless as they are remorseless. But once we embrace that reality, we can make sure they are rewarding.”

Overnight

The Dow Jones Industrial Average is down 0.47% to 15545.75. The Aussie dollar is at US94.61 cents.