Food manufacturer Goodman Fielder has rejected a takeover proposal from agribusiness group Wilmar International Limited (Wilmar) and Hong Kong based investment company First Pacific Limited (First Pacific), saying that it undervalues Goodman Fielder and is “opportunistic”.

The Company’s brands include Meadow Lea, Praise, White Wings, Pampas, Mighty Soft, Wonder White, Helga’s, Vogel’s (under license), Meadow Fresh and Irvines.

First Pacific and Wilmar are leading operators and investors in the global food industry with a long track record of investing in Australia and New Zealand and a combined market capitalisation of over $23.7 billion.

Proposal details

The proposal, which Goodman Fielder received over the weekend, is a non-binding, conditional proposal to acquire all the issued equity in Goodman Fielder by way of a scheme of arrangements at a proposed priced of A$0.65 per share, valuing the shares at $1.27 billion. Wilmar is currently a 10.1 per cent shareholder of Goodman Fielder.

The proposed scheme is conditional on, among other things, due diligence, unanimous recommendation by the Board of Goodman Fielder, and approval by the boards of Wilmar and First Pacific. Wilmar and First Pacific also requested exclusivity in relation to the proposal.

Goodman Fielder said its Board remained “focused on maximising shareholder value and will be constructive in relation to proposals which are consistent with this objective”.

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.

Goodman Fielder said it was “committed to the execution of its strategic plan” and had accelerated initiatives under Project Renaissance to deliver an additional A$25 million in cost savings, primarily through headcount reduction in the fourth quarter of the 2014 financial year; progressed a strategic review to explore options to maximise the value of its New Zealand Dairy business; and commenced a review of strategies to optimise the daily fresh delivery model in its Baking business to deliver greater cost efficiencies.

First Pacific and Wilmar said they noted the announcement by Goodman Fielder and would continue to seek engagement with Goodman Fielder’s Board about entering into due diligence aimed at bringing forward a binding proposal to Goodman Fielder shareholders.

The Companies said they considered the proposal to acquire Goodman Fielder a “compelling offer”, delivering a premium of 27 per cent above the Volume Weighted Average Price of Goodman Fielder shares since the Company’s profit downgrade announcement on 2 April 2014, and that the offer “compares favourably” with recent relevant comparable transactions.

Goodman Fielder said it had appointed Credit Suisse as financial adviser and Herbert Smith Freehills as legal advisor.

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