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28-04-2014, 11:55 AM
Goodman Fielder says Wilmar, First Pacific bid too low at $1.8bn
JOHN DURIE THE AUSTRALIAN APRIL 28, 2014 10:39AM
Singaporeans bid big on Australian food giant 3:48
What's behind the surprising takeover bid on Australian food manufacturer Goodman Fielder?
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DIVERSIFIED food manufacturer Goodman Fielder is in play after rejecting a $1.8 billion joint bid from Singapore’sWilmar and Hong Kong-based First Pacific.
The 65-cents-a-share, all-cash proposal compares with Goodman’s closing price last week of 55 cents a share and was conditional on board approval and a scheme of arrangement. The equity value of the bid is $1.27 billion, with Goodman’s $500 million in debt taking it to almost $1.8 billion.
In a statement to the stock exchange today, Goodman said that its board considered the 18 per cent premium to undervalue the company. Goodman makes grocery products under a number of well-known brands, including MeadowLea, Mighty Soft, Pampas, Crisco, Praise and White Wings,
Goodman chief executive Chris Delaney said the bid was an opportunistic one, made in the wake of the company’s profit downgrade this month.
Wilmar owns 10.1 per cent of Goodman and is already an active player in the Australian market, owning the old CSR sugar business and Manassen Foods among other assets.
US commodities giant Archer Daniels Midland, which had its own bid for grain handler Graincorp rejected by the federal government, is a significant shareholder in Wilmar.
In a statement released today, First Pacific and Wilmar called their offer “compelling”, noting that it was at a 27 per cent premium to the volume-weighted average price of GFF stock since the April 2 downgrade.
The suitors said they would continue to seek engagement with the Goodman board, with the aim of getting access to the company’s books in order to submit a binding proposal to shareholders.
Goodman stock traded higher late last week on sharply increased volume, raising questions over possible leaks ahead of the weekend bid talks.
The stock has traded between a high of 77 cents last May to a low of 47 cents after the downgrade.
On Thursday 11.6 million shares changed hands, compared to the average volume over the last six months of 7.5 million, and the stock traded up from 52 to 57 cents before closing on its lows for the day, up 5 per cent at 55 cents a share.
Goodman has been crunched in recent years by high commodity prices and the dominance of the two Australian supermarket giants.
Under Mr Delaney, the company has fought back with cost cuts and efficiencies, particularly at its baking business, which supplies daily fresh bread to supermarkets.
Analysts are tipping earnings before interest, tax, depreciation and amortisation of around $230 million this year, down from $252 million last year.
Goodman has put its New Zealand dairy division, which earns around $55 million, on the market. Based on recent deals, that division would sell for around $550 million.
The joint offer, which was rejected after the board of Goodman Fielder met with Wilmar and First Pacific representatives over the weekend, is considered to be just the first shot.
Goodman has appointed Credit Suisse and Herbert Smith Freehills as advisors, while Merrill Lynch and UBS are advising Wilmar and First Pacific.
JOHN DURIE THE AUSTRALIAN APRIL 28, 2014 10:39AM
Singaporeans bid big on Australian food giant 3:48
What's behind the surprising takeover bid on Australian food manufacturer Goodman Fielder?
Autoplay
ON
OFF
DIVERSIFIED food manufacturer Goodman Fielder is in play after rejecting a $1.8 billion joint bid from Singapore’sWilmar and Hong Kong-based First Pacific.
The 65-cents-a-share, all-cash proposal compares with Goodman’s closing price last week of 55 cents a share and was conditional on board approval and a scheme of arrangement. The equity value of the bid is $1.27 billion, with Goodman’s $500 million in debt taking it to almost $1.8 billion.
In a statement to the stock exchange today, Goodman said that its board considered the 18 per cent premium to undervalue the company. Goodman makes grocery products under a number of well-known brands, including MeadowLea, Mighty Soft, Pampas, Crisco, Praise and White Wings,
Goodman chief executive Chris Delaney said the bid was an opportunistic one, made in the wake of the company’s profit downgrade this month.
Wilmar owns 10.1 per cent of Goodman and is already an active player in the Australian market, owning the old CSR sugar business and Manassen Foods among other assets.
US commodities giant Archer Daniels Midland, which had its own bid for grain handler Graincorp rejected by the federal government, is a significant shareholder in Wilmar.
In a statement released today, First Pacific and Wilmar called their offer “compelling”, noting that it was at a 27 per cent premium to the volume-weighted average price of GFF stock since the April 2 downgrade.
The suitors said they would continue to seek engagement with the Goodman board, with the aim of getting access to the company’s books in order to submit a binding proposal to shareholders.
Goodman stock traded higher late last week on sharply increased volume, raising questions over possible leaks ahead of the weekend bid talks.
The stock has traded between a high of 77 cents last May to a low of 47 cents after the downgrade.
On Thursday 11.6 million shares changed hands, compared to the average volume over the last six months of 7.5 million, and the stock traded up from 52 to 57 cents before closing on its lows for the day, up 5 per cent at 55 cents a share.
Goodman has been crunched in recent years by high commodity prices and the dominance of the two Australian supermarket giants.
Under Mr Delaney, the company has fought back with cost cuts and efficiencies, particularly at its baking business, which supplies daily fresh bread to supermarkets.
Analysts are tipping earnings before interest, tax, depreciation and amortisation of around $230 million this year, down from $252 million last year.
Goodman has put its New Zealand dairy division, which earns around $55 million, on the market. Based on recent deals, that division would sell for around $550 million.
The joint offer, which was rejected after the board of Goodman Fielder met with Wilmar and First Pacific representatives over the weekend, is considered to be just the first shot.
Goodman has appointed Credit Suisse and Herbert Smith Freehills as advisors, while Merrill Lynch and UBS are advising Wilmar and First Pacific.