By NZPA
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Friday 13th December 2002 |
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New Zealand's richest man plans to put the cereal and snacks group into the pot with his 57.58 percent-held spices and yeast company, Burns Philp, and the recently bought New Zealand Dairy Foods (NZDF) to create a mega Australasian food group.
"Certainly the rationale behind the takeover is that it will be an Australian and New Zealand-based, global food company," said Peter Brookes, a spokesman for Mr Hart.
He said Mr Hart's management of NZDF, bought in April for $245 million, showed "the size of company which Graeme Hart has the experience of dealing with in the consumer branded products area."
"When you look at Goodman Fielder, it is made up of whole lot of businesses which are the same size of New Zealand Dairy Foods -- Uncle Toby's and so forth," said Mr Brooke, of public relations firm Cannings Ltd
"Certainly the end result looks like to create a large, Australian and New Zealand, globally competitive food group."
Mr Hart was not immediately available to comment.
Burns Philp said any decision on its proposal to acquire NZDF, which is 100 percent owned by interests associated with Mr Hart, would be subject to a report by an independent expert and the vote of Burns Philp shareholders not associated with Mr Hart.
NZDF, whose brands include Anchor, Fresh 'n Fruity, Swiss Maid, Country Goodness, Anchor, Chesdale, and Ornelle, supplies about 45 percent of the domestic chilled dairy foods in New Zealand, competing against Fonterra's Mainland Products.
It has previously said it needs to expand to Australia to grow but has put off such moves until it had certainty of milk supply from Fonterra which it recently achieved.
Mr Hart, who left school in his teens to enter the printing trade, made his lightning raid last night to buy 14.9 percent of Goodman through Burns Philp at $A1.85 a share, a 24 percent premium to Goodman's $A1.49 close yesterday.
Burns Philp put its hostile bid in at that price. Goodman shares rose on the 41 cents, 25 percent, to $2.06.
Michael Wilson, chief investment officer at fund manager Ausbil Dexia described it as a very aggressive takeover offer.
Burns Philp is limited to a 14.9 percent stake until it receives Foreign Investment Review Board (FIRB) approval for its offer.
The offer values Goodman at about $A2.2 billion ($NZ2.5 billion), five times the size of Burns Philp's $A434 million closing market capitalisation yesterday.
Burns Philp said it would fund the acquisition through existing cash reserves of $A770 million, new debt and equity proceeds from the exercise of options.
Goodman told shareholders to take no action.
"The bid is unsolicited. Goodman Fielder advises that shareholders do nothing at this stage, pending further developments," the company said.
Goodman was founded by Motueka brothers (Sir) Pat and Peter Goodman who turned it into a giant flour and bread company that once made a bid for British food group Ranks Hovis McDougall.
Goodman chief executive Tom Park has been focusing on getting more money from Goodman's iconic Uncle Tobys cereal, Meadow Lea margarine, Buttercup bread and White Wings cake brands, rather than from ingredients sales or processing.
About three years ago the Goodman board rejected a leveraged buyout offer of about $A1.65 a share as too low, invoking the wrath of shareholders who watched helplessly as the stock hovered stubbornly around $A1.
However in mid-July the stock touched $A1.76, its best price in more than three years, as the company neared the sale of its milling business, its last big non-core asset targeted for sale.
Former blue chip Burns Philp almost collapsed five years ago after a failed attempt to create a global herbs and spices empire.
Mr Hart, who spent $A260 million in mid-1997 to build a 19.9 percent stake in the group at up to $A2.45 a share, saw its shares collapse to just 3.4 cents each about a year later when it revealed the extent of its losses.
However, under Mr Hart the company has restructured and refinanced, and in 2001/02 booked a year net profit before one-offs of $A98 million, struck on revenue of $A1.4 billion.
The restructuring saw his stake increase substantially.
Goodman's 2001/02 year profit before one-offs was $A132 million, struck on revenue of $A3.0 billion.
"Mr Hart is obviously looking to do a bit of empire-building through Burns Philp," said Albert Hung, head of Australian equities at fund manager Tower Asset Management.
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