WELLINGTON/SYDNEY (Reuters) - Malaysian billionaire Robert Kuok’s Wilmar International Ltd has convinced Goodman Fielder Ltd to accept a lower takeover offer, as the Australasian food firm warned of a massive impairment charge due to pressures on its baking unit.
Wilmar and Hong Kong investment firm First Pacific will now pay A$1.32 billion ($1.25 billion) or 67.5 cents per share for the struggling maker of Country Life bread and Meadow Lea margarine, Goodman said in a statement to the Australian Securities Exchange on Wednesday.
Just a month earlier, Wilmar and First Pacific were willing to pay A$1.37 billion or 70 cents per share after Goodman rejected their initial offer of 65 cents.
Goodman gave no reason for the lower offer, but said it expected an impairment charge of up to A$400 million in the 2013-14 financial year due to “challenging trading conditions and outlook” at its bakery business.
The revised offer “represented an attractive value outcome for shareholders”, Goodman Chairman Steve Gregg said in the statement. The Sydney-based company’s willingness to accept a 3.5 percent cut in the takeover offer comes as Australian and New Zealand bread and dairy producers face intense pricing pressure domestically due to weak consumer confidence and tough competition.
At the same time, however, they are attractive takeover targets for rivals hoping to tap strong demand for quality food to feed Asia’s growing middle class.
Goodman has been seen as failing to capitalise on its regional expansion prospects, and until recently was seeking interest from potential buyers for its New Zealand dairy business as a stand-alone entity.
“If there was another potential bidder they would have come out of the woodwork by now,” Morningstar analyst Peter Rae said.
“If (Goodman) want a deal to go through, then they’ve got to accept the lower price.”
Goodman shares fell 3 percent to A$0.655 at 0230 GMT, below Wilmar’s downgraded offer price.
In January, Canada’s Saputo Inc took control of Australia’s Warrnambool Cheese and Butter Factory Company Holdings Ltd after an epic bidding war involving nine players from Australia and Asia. Japan’s Kirin Holdings Co Ltd, an underbidder, held onto a 10 percent stake.
The same month, China’s state-owned Bright Food [SHMNGA.UL] bought Western Australian yoghurt and cheese producer Mundella Foods for an undisclosed sum, three years after paying A$530 million for a 75 per cent stake in Australian food supplier Manassen.
The expected impairment charge of A$300 million to A$400 million compares with Goodman’s April 2 warning that its full-year earnings were likely to be 15 percent below analysts’ expectations of A$180 million.
($1 = 1.0574 Australian Dollars)
Editing by Stephen Coates