Goodman Fielder Ltd. accepted a A $1.37 billion takeover offer from Wilmar International Ltd. and First Pacific Co. after the bidders lifted an initial proposal by 7.7%.
The board of Australia’s biggest baker will unanimously recommend the 70 Australian cents-a-share proposal and let the bidders conduct due diligence for four weeks, the Sydney-based company said in a regulatory statement today.
The offer had already received support from the two largest shareholders, who had agreed to sell a 9.8% stake to First Pacific.
“The board has been focused on generating the best outcome which maximized value for our shareholders,” Goodman Fielder Chairman Steve Gregg said in the statement. “This revised proposal is consistent with that objective.”
Goodman Fielder shares, halted yesterday, fell to as low as A$0.64 when they resumed trading today, below the original 65-cent offer made on 28 April that the company had said “materially undervalues” its business. Sydney-based Pacific Equity Partners is also weighing up a bid, the Financial Review reported 5 May, without saying where it got the information.
The increased offer is “ a pretty good deal,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. “From a shareholder's point of view it could be a get-out-of-jail free card.”
Goodman Fielder has posted net losses in two of the past three fiscal years. The maker of Meadow Fresh yogurt, Olive Grove margarine and Wonder White bread will also report a loss in the current year ending 30 June, according to the median of seven analyst estimates compiled by Bloomberg.
Stock Decline
Rising incomes in nearby Asian markets have stoked interest in acquiring food-related companies in Australia, the fourth biggest wheat exporter and third largest shipper of beef. About A$12 billion in deals have been announced in the country’s food and agricultural sector over the past five years including the offer for Goodman Fielder, according to data compiled by Bloomberg.
The company’s shares fell 1.1% to close at 66.5 Australian cents in Sydney trading. The stock dropped a record 22% on 2 April after Goodman Fielder said earnings would fall as much as 15% below analysts’ estimates and that it expects to write down businesses.
Goodman Fielder shares traded in Wellington climbed 1.4% to 74 New Zealand cents today.
Previous Approach
Wilmar had previously approached the baker and discussed a takeover after buying a 10% stake in February 2012. Discussions that year failed to produce a price they could agree on and Wilmar was considering selling the holding, Chief Executive Officer Kuok Khoon Hong said in August 2012.
The revised offer gives Goodman Fielder an enterprise value of A$1.92 billion, equivalent to 7.9 times its A$243.7 million in earnings before interest, taxes, depreciation and amortization in the most recent 12-month period. That compares with a median multiple of 9.9 times Ebitda in 40 baking and dairy takeovers globally over the past five years, according to data compiled by Bloomberg.
Wilmar, the world’s biggest palm-oil producer, will bid with First Pacific through a 50-50 joint venture.
Wilmar said yesterday that First Pacific has entered into agreements with Goodman Fielder’s two largest shareholders, Perpetual Ltd. and Ellerston Capital Ltd., to buy as much as 9.8% of its shares if the bid is recommended.
Bloomberg
