Meadow Lea to fall into foreign hands
Meadow Lea margarine and Mighty Soft bread are the latest Australian household brands set to fall into foreign hands.
The troubled owner of the breads and spreads brands, Goodman Fielder, has accepted a $1.34 billion takeover offer from Hong Kong-based investment firm First Pacific and Singapore agribusiness Wilmar International.
It was a case of third time lucky for the Asian pair, who have been trying to buy the troubled Australian food maker for several months.
Their original offer of $1.27 billion in April was rebuffed, so they sweetened it to $1.37 billion in May.
However since examining Goodman Fielder’s books in recent weeks, the pair decided to lower their bid.
Directors on the board Goodman Fielder, whose brands also include Praise, White Wings, Helga’s and Wonder White, are recommending shareholders accept the offer.
Investors appeared disappointed that the Asian predators had lowered their offer by 2.5 cents a share, with Goodman Fielder’s shares falling 2.5 cents, or 3.7 per cent, to 65.5 cents on Wednesday.
However, Morning Star equities analyst Peter Rae says it’s a reasonable offer given there are no other suitors.
“I think the board views it as a good deal because there are no other offers out there, and if there were, they would have put their hands up by now,” he said.
“Goodman Fielder is in a tough business with the major supermarkets, Coles and Woolworths, holding such strong bargaining power, which makes it difficult for them to pass on price increases.”
He said First Pacific and Wilmar, the world’s biggest palm oil processor, may want to use Goodman Fielder’s well-known products as a stepping stone into the Asian region.
The food maker will appoint an independent expert to examine the offer, with shareholders expected to vote on the deal in November.
Goodman Fielder chairman Steve Gregg said the latest takeover offer represented a positive outcome for employees and customers.
“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 added.
The offer will need support from Goodman shareholders holding at least 75 per cent of the company’s shares.
It also requires the nod of approval from Australia’s Foreign Investment Review Board and authorities in New Zealand and China.
Goodman Fielder has been cost cutting, restructuring and divesting over the past three years, to focus on its core brands and to reduce debt.