Goodman Fielder directors recommend $1.3 billion First Pacific and Wilmar joint takeover
One of Australia’s largest food manufacturing companies, Goodman Fielder, has entered into a scheme implementation deed with Hong Kong-based investment management and holding company First Pacific Company Limited (First Pacific) and leading Asian agribusiness Wilmar International Limited (Wilmar).
Under the Scheme, First Pacific and Wilmar will acquire 100 per cent of Goodman Fielder shares.
Goodman Fielder’s brands include Meadow Lea, Praise, White Wings, Pampas, Mighty Soft, Wonder White, Helga’s, Vogel’s (under license), Meadow Fresh and Irvines.
The takeover offer for Goodman Fielder comes not long after the Company announced it expected its earnings in the 2014 financial year to be 10 to 15 per cent lower than previously expected. Australian Food News reported in April 2014 that Goodman Fielder had said the lower earnings expectations were a result of difficult market conditions. Industry commentators have suggested Goodman Fielder’s losses could have been the result of poor strategic decisions to extend the Meadowlea branding into a sterols-based margarine product, which the supermarkets would not to stock.
The 50:50 joint venture between First Pacific and Wilmar will see Goodman Fielder shareholders receive A$0.675 cash per share, subject to all necessary conditions being satisfied or waived. The Scheme also allows for Goodman Fielder to pay a final dividend of A$0.01 per share for the year ending 30 June 2014. Australian Food News reported in May 2014 that an earlier offer had valued Goodman Fielder at A$0.70 per share.
Goodman Fielder said that in the absence of a superior proposal, and subject to an independent expert concluding that the Scheme is fair and reasonable and accordingly in the best interests of Goodman Fielder shareholders, the Board of Goodman Fielder has unanimously recommended that Goodman Fielder shareholders vote in favour of the Scheme.
Subject to the same qualifications, the Company said all members of the Goodman Fielder Board will vote (or will procure the voting of) all Director Goodman Fielder Shares at the time of the Scheme Meeting in favour of the Scheme.
“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,” said Steve Gregg, Chairman of Goodman Fielder.
“I believe it also represents a positive outcome for our employees, our customers and our
consumers,” Mr Gregg said. “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,” he said.
Goodman Fielder said it would appoint an independent expert to determine whether the Scheme is fair and reasonable and in the best interests of its shareholders. The independent expert‟s report will be included in a Scheme booklet which is expected to be distributed to shareholders in September 2014.
The implementation of the Scheme is subject to a number of conditions which include the following:
- Goodman Fielder shareholders approving the Scheme at a Scheme Meeting (requiring approval from a majority in number of shareholders who vote and at least 75 per cent of the total number of shares voted);
- all necessary regulatory approvals being obtained, including approval from the Foreign Investment Review Board in Australia, the Overseas Investment Office in New Zealand and the Ministry of Commerce (MOFCOM) in China;
- no material adverse change, “prescribed occurrence‟ or regulatory restraint; and Court approval of the Scheme.
The Implementation Deed contains customary exclusivity provisions and details the circumstances in which Goodman Fielder may be required to pay a reimbursement fee to Wilmar and First Pacific.
Goodman Fielder said it was currently anticipated that a Scheme Meeting will be held in November 2014 and, subject to the conditions of the Scheme being satisfied, the Scheme was expected to be implemented by the end of 2014. Any delays in obtaining the necessary regulatory approvals could result in the implementation of the Scheme being delayed.
Update on carrying value of businesses
On 2 April 2014, Goodman Fielder advised that the Group expected to record non-cash impairments, reflecting the challenging trading conditions and outlook in its core Baking and Grocery businesses.
As a result, Goodman Fielder said it expected to record a non-cash impairment charge in the range of A$300-400 million (unaudited) in its Group accounts for the year ended 30 June 2014 (”FY14”). 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.
Goodman Fielder advises that post the expected non-cash impairment charge, the Group will continue to operate comfortably within its banking covenants.