Food group Goodman Fielder (GFF) has folded and will cop a small cut in the value of a takeover offer from Asian suitors.
Goodman directors told the ASX yesterday that they would recommend the new price of 67.5c a share, instead of the previous 70c a share.
Hong Kong-based investment firm First Pacific and Singapore’s Wilmar International revealed on Monday that they did not want to pay the previously mentioned 70c a share (plus a one cent a share dividend) because due diilgence on Goodman Fielder’s books had raised questions about the company’s financial performance.
The companies signed a scheme implementation deed which will allow the two companies to buy the remaining shares in Goodman that they do not already own.
It was the second big takeover concluded this week involving an Australian company and Asian based suitor.
The Thai-controlled Frasers Centrepoint (based in Singapore) is heading for a win in its bid to buy control of Australand (ALZ) (which used to be controlled by a big Singapore based property group Capitaland). Barring a counter offer, Frasers’ $2.6 billion offer will succeed.
Likewise with Goodman Fielder, the joint bid will succeed, baring a counter offer, which is a very remote possibility given Goodman Fielder’s reputation of continuing underperformance and weak profits.
GFF 1Y – Goodman to accept lower takeover bid
“In reaching our conclusion to unanimously recommend that shareholders vote in favour of the scheme, the board concluded that the proposal represented an attractive value outcome for shareholders,” Goodman Fielder chairman Steve Gregg said in a statement to the ASX.
“I believe it also represents a positive outcome for our employees, our customers and our consumers. It provides an opportunity to further leverage our strong consumer food brands in Australia and New Zealand to grow our business across the Asian region.
“Therefore, in the absence of a superior proposal and subject to the independent expert concluding that the scheme is fair and reasonable and accordingly in the best interests of Goodman Fielder shareholders, the board will unanimously recommend that shareholders vote in favour of the Scheme,” he said.
Underlining why the bid price was cut, Goodman Fielder has also announced write-downs in its intangibles of between $300 million and $400million, "reflecting the challenging trading conditions and outlook in its core baking and grocery businesses".
The company revealed the impending write-down in a statement on April 2, just before the takeover bid emerged.
"This charge is expected to be predominantly against the Australian/New Zealand Baking business. The final impairment charge will be determined as financial statements for FY14 are completed," the company explained in yesterday’s statement.
Goodman Fielder has made a series of profit warnings in the last 12 to 18 months, the latest was in April.
Goodman says despite the latest write-downs it “operates comfortably within its banking covenants”.
