Hart targets Dairy Foods

By Duncan Bridgeman

Friday 14th May 2004

A move by Graeme Hart-controlled Burns Philp to buy NZ Dairy Foods is back on the table as restructure at Goodman Fielder gains momentum.

Burns Philp indicated it was interested in buying Dairy Foods, a company owned by Hart's Rank Group, when it took over Goodman Fielder last year.

Sources said this week a deal was close, with Goodman Fielder preparing for a massive shakeup of its New Zealand operations.

Dairy Foods is tipped as a key part in the restructure, with Burns Philp looking to combine the two companies' distribution and infrastructure networks.

A Dairy Foods sale would also free up cash for Hart to look at other acquisitions, such as the Australian assets of Italian firm Parmalat, in receivership.

Hart has said his plan is to build a significant consumer food group with reliable earnings.

Burns Philp chief executive Tom Degnan was unavailable for comment but said through a spokeswoman the company would not comment on speculation. In February, Burns Philp announced a drop in profit of nearly 10% for the six months to December 31 compared with the previous corresponding period.

However, the company's sales revenue almost trebled to $A1.7 billion, reflecting the addition of Goodman Fielder.

The company recently sold its US herbs and spices business for an estimated $A300-500 million, which helped to improve its highly leveraged balance sheet.

The $2.5 billion takeover of Goodman Fielder was described as the most audacious bid of the year and the jury is still out on its success.

So far, management has stripped nearly $A100 million from the group's costs but concerns about the company's debt levels and cashflow position have seen its shares largely tread water this year.

Comments from our readers

No comments yet