Bega has reportedly been disinvited from the sale process for Fonterra’s Mainland Group. Fonterra has a long-term contract to distribute and manufacture the Bega Cheese brand. Bega argues any spin off of Mainland Group will trigger a clause to renegotiate or cancel the contract—leading to potential loss of value for the business.

The Australian Financial Review reports some sources close to the discussions believe Bega Cheese baulked at signing a non-disclosure agreement and so was not allowed into the data room. Others say Fonterra is deliberately keeping Bega out.

Those in the know on the trade sale discussions believe it’s now a two-horse race between Lactalis and private equity firm Warburg Pincus. As well as the trade sale Fonterra has flagged a potential ASX listing, however fund managers who have heard the IPO pitch are reportedly not convinced of the viability.