April 30, 2014

30/04/14: Shares on Rise After Takeover Rejected

Australian baker and food manufacturer, Goodman Fielder, has received a takeover bid from a Singapore-Hong Kong consortium, Wilmar and First Pacific.

The Australian company - maker of well known brands including Helga's, Wonder White, White Wings, Pampas, ETA, Praise, Meadow Lea and Cornwell's - has been approached by Singaporean food maker Wilmar International and Hong Kong-listed investment firm First Pacific Company with a 65 cent per share offer. That is an 18 per cent premium over Goodman Fielder's last closing price of 55 cents on Thursday, and values the company at $1.27 billion.

Whole Wheat Honey Bread from My Honey
Whole Wheat Honey Bread from My Honey (Photo credit: madlyinlovewithlife)
The offer arrives at a particularly vulnerable time for Goodman, coming just weeks after the April 2 earnings downgrade — the company’s fourth since 2011 — and warnings that further asset writedowns were likely this year following $700 million in write-offs over the past three years, sending Goodman’s shares plummeting as much as 20 per cent to a 19-month low of 47.5c.

However, it underlines the strategic value of Australian food businesses to international investors, following a string of foreign takeovers of Australian food and agricultural businesses aimed at capitalising on the rapid growth of demand from nearby Asia, with Canadian dairy giant Saputo’s $500m-plus takeover bid for Warrnambool Cheese & Butter merely the most high-profile example of a widespread trend.

Other recent deals include China’s Bright Food in January adding West Australian cheese and yoghurt producer Mundella to the Manassen Foods business it bought in 2011 and Hong Kong-based investor William Hui paying $70m in February for Melbourne milk supplier United Dairy Power.

Investors are expected to lobby the Goodman Fielder board this week to engage with the Wilmar-First Pacific consortium, but in the meantime the share price have risen.



The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine GFMT which is published by Perendale Publishers Limited.

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