Goodman Fielder shares halted to mull ‘potential change of control transaction’

UPDATED: Shares in Goodman Fielder [NZX: GFF] have been halted while the food ingredients maker contemplates a takeover offer, just over a fortnight after receiving a A$1.27 billion bid led by the world's largest palm oil processor, Singapore-based Wilmar International.

The Sydney-based Goodman requested its NZX and ASX-listed shares be halted "in relation to information received by the company in respect of a potential change of control transaction which is under consideration," it said in a statement to the ASX. The shares closed unchanged at 73 cents on the NZX, and were down 0.4 percent to 67.2 Australian cents on the ASX before the halt.

The notice comes two weeks after Wilmar teamed up with Hong Kong-listed investor First Pacific Co to make an 65 Australian per share offer for the Australasian food ingredients maker, which the board rejected as opportunistic and materially undervaluing the firm.

Wilmar bought a 10 percent stake in Goodman in 2012, and registered interest in the food ingredients maker's assets which were up for sale at the time.

In February, Goodman forecast normalised annual earnings to be "broadly in line" with the previous year's A$185.6 million as soaring milk prices and intense competition in baking goods eroded profitability.

The maker of household brands including Vogel's bread, Meadowfresh milk and yoghurt, and Meadowlea butter and margarine has been cost cutting, restructuring and divesting over the past three years, to focus on its core brands and reduce debt.

(BusinessDesk)

EARLIER: Dairy sale puts Wilmar offer in jeopardy 

After a two-week hiatus, the Goodman Fielder [NZX: GFF] takeover has sparked into life, with bidder Wilmar International opposing the proposed sale of the New Zealand dairy business.

Wilmar, which owns a 10.1% stake in Goodman Fielder, says any asset sale could prompt it to take its indicative 65Ac a share offer off the table. The bid in conjunction with Hong Kong investor First Pacific values the transtasman food conglomerate at $A1.27 billion.

“It’s a condition of our indicative proposal that Goodman Fielder does not make any material asset sales,” a Wilmar spokesman said.

“Any potential sale of the New Zealand dairy business needs to be weighed against the risk it poses to the certainty of a full cash offer for the entire business. Goodman Fielder shareholders risk losing that offer and being left holding an investment in a diminished vehicle if any asset sales are conducted.”

The decision to push ahead with the dairy sale, which had been flagged as early as February, could be seen as a tactic to leverage a higher bid.

Goodman Fielder’s financial adviser Credit Suisse last week sent an 11-page “information flyer” to potential buyers of the dairy business, stating it has average revenue of $NZ500 million and earnings before interest, tax, depreciation and amortisation (ebitda) of about $NZ60 million.

These figures, which have not been previously disclosed, are based on average sales and earnings over the past three years and forecasts for 2014, when earnings are expected to take a hit from a 50% rise in New Zealand farmgate milk price.

The figures also exclude losses from the New Zealand smallgoods business, which was recently sold, and include sales and earnings from dairy and UHT milk sales into Asia, which are currently reported as part of Goodman Fielder’s Asia-Pacific business unit.

Based on the median ebitda multiple paid for dairy assets over the last decade of 11.6, the dairy business could be worth around $A647 million. This compares with its current $A450 million book value and market valuations of around $A460 million. Even on a more conservative multiple of 10 times earnings, the unit could be worth at least $A550 million.

The valuations differ from a similar Credit Suisse document sent out in March. This was prepared after Goodman Fielder said it had received unsolicited expressions of interest. 

It estimated the division would report earnings of just $A32.1 million in the current financial year.

It is believed to have been approached by about 20 potential buyers, including food and dairy companies such as Danone and Saputo, who are keen to expand their presence in Asia.