Bidders save face over Goodman Fielder takeover offer
THE AUSTRALIAN JULY 02, 2014 11:25AM
John Durie
Senior Writer/Columnist
Melbourne
FACE-SAVING was the name of the game as Wilmar and First Pacific agreed to pay $47.5 million less than originally planned for their $1.9 billion acquisition of Goodman Fielder.
The original deal was struck at 70c a share plus a 1c a share dividend. The new deal was struck, at 67.5c plus a 1c a share dividend, or a grand 2.5c a share lower bid for the 1.955 billion shares on issue.
The bidders already spoke for 20 per cent of the company, the last 10 per cent costing 70c a share, so the nickel and dime play was for the other 80 per cent it didn’t own.
Goodman has $549 million in debt and is in need of a massive recapitalisation with around $350 million in capital expenditure planned in the next couple of years.
The plan now is for the scheme booklet to be sent to shareholders in September with a meeting planned for November, and with that Goodman’s inglorious nine-year reign as a public company will be over.
Technically it will be split between the publicly listed Wilmar and the publicly listed First Pacific but just how much detail they will share on the company going forward remains to be seen.
Before you listen to tales of gloom emerging from the due diligence room, remember when Wilmar lawyer La-Mae Teo rang Goodman’s Stephen Gregg on Friday night to tell him the bid price must be lower the final difference was 2.5c a share, or $47.5 million, on a $1.9 billion deal.
It’s not a big gap.
So what kept everyone up all night last night seems to have been arguing the fine details on the governance arrangements between the two sides with everyone stationed in their own offices scattered throughout the world.
In Australia John Knox from Credit Suisse and Tony Damien from Freehills were working with Goodman chair Stephen Gregg and chief Chris Delaney who had returned early from his son’s wedding in the US for the occasion.
Wilmar had UBS’s newly promoted Kelvin Barry and Gilbert &Tobin’s Peter Cook in its corner.
Goodman was floated by Credit Suisse in 2005 at $2 a share and has struggled ever since, being a collection of business’s that New Zealand billionaire Graeme Hart couldn’t sell plus his undersized New Zealand dairy business.
This year Delaney, who had pressed all the right buttons, was hit by a combination of a $20 million increased in dairy costs due to the milk price rise and a series of shutdowns in his under-invested bakeries.
When you are trying to handle the supermarket behemoths and commodity prices that combination proves terminal.
The question now is what Wilmar and First Pacific do next with what is essentially a collection of different businesses ranging from chooks in Fiji to Meadowlea spreads and Helgas bread in Australia.
Back in Singapore Wilmar has worked overtime trying to satisfy all concerns over its status as the world’s biggest palm oil producer.
In Australia it is also fighting sugar farmers over its move to bypass them to market its sugar directly offshore.
The plan is to take the Goodman assets to Asia and that will be a boon to all concerned.
That is if the plan works.
First 65 then 70 then 67.5. Excellent negotiators
If it is a bargain for a good and sound business, I won't mind. However, GFF appears to be a lemon since it was relisted back in 2005 and business conditions remain extremely tough notwithstanding the brands that it is carrying...
(02-07-2014, 08:07 PM)mrEngineer Wrote: [ -> ]First 65 then 70 then 67.5. Excellent negotiators
Andrew Forrest is a doer...long term likely to be successful and not a pipedream...
Our food on China’s menu
THE AUSTRALIAN JULY 31, 2014 12:00AM
Andrew Burrell
Senior Business Reporter
Perth
Can Australia be the food bowl for Asia?
BILLIONAIRE Andrew Forrest has signed up three of China’s biggest food companies to join his radical push to revive Australia’s farm sector and position the nation as China’s “friendliest, largest, and most efficient” supplier of agricultural products over the next 100 years.
Mr Forrest told The Australian yesterday that he believed it was “unprecedented” for the agribusiness giants — privately owned New Hope Group, state-owned COFCO Group and Singapore-listed Wilmar International — to back such an initiative.
The tycoon will be joined today by federal Agriculture Minister Barnaby Joyce, Business Council of Australia chief Jennifer Westacott and industry leaders in Sydney for the first meeting of the Australia-Sino 100-Year Agricultural and Food Safety Partnership, known as ASA 100.
He said agriculture could again become a mainstay of the national economy but only if our companies, industries and state and federal governments work together to promote the national interest, boost efficiencies and streamline investment.
“This is an all-of-country response,” he said. “I would like Australia to be seen as China’s friendliest, largest, most reliable, highest quality, most competitive, most efficient food and agricultural products supplier.”
The idea for a 100-year partnership arose from a meeting between Mr Forrest and Chinese Premier Li Keqiang in Beijing earlier this year. Mr Forrest said Mr Li’s No 1 concern was ensuring a safe food supply for China’s 1.3 billion people.
Mr Forrest made his fortune selling iron ore to China as the founder of Pilbara miner Fortescue Metals Group, but in recent years he has turned his attention to philanthropy and agribusiness.
In May, he acquired Western Australia’s largest beef processor, Harvey Beef, which is the state’s only accredited exporter to China.
Today’s meeting will bring together the Australian side of the partnership, with meetings to be held in China in coming months.
The ASA 100 will comprise 50 members from each country who will meet annually. Members will include federal, state and territory ministers, major food producers and distributors from Australia and China.
Mr Forrest rejected suggestions that Australia would struggle to become the “food bowl” for Asia due to constraints such as drought and a lack of infrastructure.
“Australia has had those constraints for over 200 years and at various points in time we’ve performed spectacularly well and competed spectacularly well overseas, and at other times we haven’t,” he said. “I believe this is about a cohesive response from Australia.”
Mr Forrest said China had become used to dealing with Australian states and companies that were competing against each other.
“It reminds me of the early days of the iron ore industry when we were so fixated on competing with ourselves and we dropped the ball and Brazil came into the market for 350 million tonnes of iron ore, which actually could have all come from Australia,” he said.
“We didn’t become China’s mainstay iron ore supplier. If we market ourselves as Australia to all of China, then that lifts our entire country in the eyes of China and we become in the Chinese psychology the supplier of choice whenever you think beef, wool, cotton or natural products.”
Mr Forrest said there were often gaps between state and federal policy and he believed the ASA 100 would enable participants to address inefficiencies across the sector.
He welcomed increased foreign investment in Australian agribusiness, admitting this put him at odds with Mr Joyce.
One of the Few Good Men - Andrew Forrest
Forrest outed as loan friend of farmers
THE AUSTRALIAN AUGUST 01, 2014 12:00AM
Andrew Burrell
Senior Business Reporter
Perth
Andrew Forrest
Mining baron Andrew Forrest said he made anonymous loans to keep farmers in business. ‘We see farmers as the fabric of society’ Picture: Renee Nowytarger Source: News Corp Australia
FOUR years ago, dozens of farmers across the drought-plagued southern region of Western Australia began receiving cheques from an anonymous benefactor.
The interest-free loans, which totalled millions of dollars, enabled the farmers — many of whom were suffering depression — to plant their crops that year and stay in business amid some of the worst agricultural conditions ever experienced.
Until now, the donor’s identity has remained a mystery.
But Fortescue Metals founder and philanthropist Andrew “Twiggy” Forrest tells The Australian he is happy to be outed as the businessman who extended the loans in 2010.
“These farmers were identified by a men’s health organisation — they were depressed or anxious or suicidal,” Forrest says in an interview.
“We were so moved by their plight and how crucial we see farmers as the fabric of society that we made those loans.
“All of them were overwhelmed in their gratitude and wanted to know who it was — and to this day it hasn’t been revealed.”
The belated disclosure is part of the indefatigable Forrest’s latest mission: to rescue Australia’s agricultural sector by creating a powerful partnership with China that will deliver prosperity for at least the next 100 years.
The entrepreneur who successfully picked the iron ore boom when he created Fortescue in 2003 is now devoting much of his energy to what many believe will be the next great boom: the surge in Chinese demand for high-quality agricultural produce.
He rubbishes talk that there are too many constraints — such as drought, lack of money and poor infrastructure — for Australia to become a key agricultural supplier to Asia.
With typical Forrest zeal, he sees solutions rather than problems. And on his next trip to China, he will be handing out samples of Australian steak to convince the locals of the quality of our beef.
“I know for certain that demand for our agricultural products is going to accelerate in the years and decades ahead, and I’m positioning our country to be the major beneficiary of that,” he says.
In Sydney yesterday, Forrest led the first local meeting of his Australia-Sino 100-Year Agricultural and Food Partnership (ASA 100) — an idea that was crystallised at a meeting the tycoon held with Chinese Premier Li Keqiang in Beijing in April.
Yesterday’s meeting was attended by a who’s who of national agribusiness, including Goodman Fielder’s Chris Delaney, Meat & Livestock Australia’s Richard Norton, Wesfarmers commercial director Ian McLeod and AACo’s Jason Strong
Federal Agriculture Minister Barnaby Joyce was also there, along with his state and territory counterparts.
Some of China’s biggest food companies — including the private New Hope Group and Singapore-listed Wilmar International — have also signed up to the new partnership
The participants agreed yesterday to hold an inaugural session of both Chinese and Australian members around the time of the G20 meeting in Brisbane in November.
And they agreed that from now on the Australian agricultural industry would market itself to China as a common brand under a single logo.
Forrest says he is happy to finally discuss his farm aid of recent years because it highlights the despair many on the land have experienced for so long.
But he also hopes it proves to his sceptics — and there are many — that his focus on agriculture is tied to his philanthropy and his lifelong links to the land rather than his money-making prowess.
“The heart of this goes back to my growing up and doing it pretty tough on a sheep and cattle station, where the margins were incredibly thin and eventually it had to be sold,” he says.
Forrest grew up at Minderoo station, near Onslow in Western Australia’s Pilbara.
It was a happy childhood full of outback adventure, but one of the worst experiences of his life was being told by his father in 1998 that he was selling the vast station due to years of debt and drought.
Minderoo had been in the family’s hands since the 1970s, when it was established by Forrest’s great grandfather David, who owned the property with his famous brothers John and Alexander.
When Minderoo was put up for auction in 2009, Forrest bought it back for $12 million, joyfully reclaiming what he had always viewed as his ancestral land.
More recently, Forrest tripled the size of his pastoral holdings to 7300sq km by snapping up two adjoining cattle stations. He is now one of the state’s biggest individual property holders, boasting a land area that is roughly six times the size of New York City.
This year, Forrest bought Western Australia’s biggest beef processor, Harvey Beef, in a deal worth more than $30m.
Harvey Beef is WA’s only accredited exporter of beef to China, processing about 145,000 grass and grain-fed animals each year, and Forrest plans to upgrade its facilities to meet growing domestic and international demand.
Forrest says some people have questioned his motives in forming the ASA100 given he is also seeking to personally capitalise on agricultural exports to China.
But he points out that agriculture accounts for less than 1 per cent of his total investments and the creation of the Sino-Australia partnership is aimed at creating greater competition among beef exporters that would be to his detriment.
“If I was to act as hardcore entrepreneur, I’d be doing none of this because I’m increasing my competition dramatically,” he says.
Forrest agrees that his latest ventures excite him as much as starting out in the iron ore industry and cracking open the duopoly enjoyed by BHP Billiton and Rio Tinto.
In between trying to reform Australia’s welfare system and ridding the world of slavery, Forrest will be devoting large chunks of his time to achieving this latest vision.
“This has my full energy and commitment,” he says.
http://www.businesstimes.com.sg/premium/...s-20140808
PUBLISHED AUGUST 08, 2014
Wilmar squeezed by poorer margins, associates' losses
BYCLAIRE HUANG
huangjy@sph.com.sg
LOWER margins and losses from associates dented Wilmar International's second-quarter bottomline.
Wilmar, Asia-Pacific's biggest listed agricultural products company, posted a 21.9 per cent drop in net profit to US$170.7 million for the three months ended June, from US$218.5 million a year ago.
Palm and laurics suffered a refining margin squeeze because of tighter supply of crude palm oil (CPO) and excess refining capacity in the industry. This segment recorded a 4 per cent dip in sales volume to six million tonnes in the second-quarter.
The group's share of results of associates was a pre-tax loss of US$4 million compared with a pre-tax profit of US$24.9 million a year ago.
Goodman Fielder’s $405m loss not expected to derail bid from Wilmar
THE AUSTRALIAN AUGUST 14, 2014 12:00AM
Blair Speedy
Reporter
Melbourne
Share price chart for Goodman Fielder
Share price chart for Goodman Fielder Source: TheAustralian
SINGAPOREAN agribusiness giant Wilmar Holdings is still expected to proceed with a $1.3 billion takeover of food manufacturer Goodman Fielder despite the target company yesterday reporting a $405 million loss for the past financial year.
The result was driven by non-cash impairments of $358m on the value of its baking and grocery divisions which had been flagged to the market last month, and also included a $97m loss on the sale of its biscuit, meat and pizza divisions, as well as restructuring costs as it sought to rationalise its manufacturing base.
The charges bring the amount of writedowns announced by Goodman over the past three years to around $1.2 billion.
However, Goodman chief Chris Delaney warned the negatives facing the company were not all one-off items, with surging milk and wheat costs unable to be recouped through higher selling prices.
“We’ve seen a record increase in the farmgate milk price as well as higher Aussie dollar wheat pricing,” he said, adding the company’s Australian grocery business was struggling as newly introduced products failed to gain traction with customers.
In addition, the company had incurred higher manufacturing costs as plant breakdowns meant it had to spend additional cash to fulfil customer orders from other facilities.
“This is a disappointing result in terms of where the company had expected to be at this point in the strategic plan,” he said.
However, Mr Delaney said Wilmar and bid partner First Pacific were well aware of the company’s position before the result announcement and would push ahead with their takeover offer.
“The bidders as part of their due diligence process have had access to a lot of information about the company ... they were aware of how we had guided the market and what our expectations were as much as any other shareholder,” he said.
Mr Delaney added he was not concerned the result could derail the bid.
Goodman rejected the Wilmar consortium’s offer of 65c per share in April but allowed the bidders access to its accounts for due diligence in May after it raised the price to 70c per share.
After four weeks of scrutinising the books, the price was cut back to 67.5c per share; however, Goodman still accepted the deal, subject to an independent expert’s report.
Deutsche Bank analyst Michael Simotas said the result was slightly below his expectations, but while the outlook for the baking and grocery businesses remained tough, the stock price would continue to be supported by the takeover offer.
Mr Delaney said the takeover was yet to receive regulatory clearance from the Foreign Investment Review Board, and so was now expected to be voted on by shareholders in late November rather than early in the month as previously forecast.
Shares in Goodman closed at 63c, down 1c for the day.
Another yesteryear favourite , profit has been on the down trend year after year.
Can't escape commodity downturn. But it has been doing some M&A I think.
via Xperia Z1 with Android 4.4.4 running tapatalk.
Goodman Fielder takeover deal snagged in Chinese red tape
BUSINESS SPECTATOR SEPTEMBER 08, 2014 8:32AM
Mitchell Neems
Business Spectator Reporter
Melbourne
GOODMAN Fielder’s $1.9 billion takeover by suitors First Pacific and Wilmar will be delayed by about three months as the deal awaits regulatory clearance from China.
The scheme implementation deed between the parties was set to conclude on December 31 but has now been pushed to March 31 next year.
“While Wilmar and First Pacific are continuing to progress the required regulatory approvals, Goodman Fielder and Wilmar/First Pacific now anticipate that the process for obtaining approval from the Ministry of Commerce in China is likely to take longer than initially anticipated,” the takeover target said in a statement.
Goodman Fielder said it was eyeing a shareholder meeting to validate the takeover in the first quarter of calendar 2015.
The food manufacturer said it continued to recommend the deal in the absence of a superior proposal and subject to an independent expert concluding that it is fair and reasonable.
Goodman Fielder swung to a net loss of $405.1 million in the year to June 30, compared with a net profit of $102.5m in the previous year.
In April, the group warned difficult trading conditions would hit its full-year earnings. It said manufacturing and supply chain cost savings had been delayed, and tipped normalised earnings before interest and taxation between 10 per cent and 15 per cent below analysts’ consensus of approximately $180m.
Goodman Fielder then agreed in July to accept a reduced takeover bid from suitors First Pacific and Wilmar of 67.5c per share, which would allow it to pay a 1c final dividend.
The suitors had earlier offered 70c a share plus a 1c dividend, but after conducting due diligence said the bid was too high.
The company last month flagged a non-cash impairment charge of $300m to $400m due to challenging trading conditions.
Rising milk prices and competition in baking goods have eroded profitability for the maker of household brands including Vogel’s bread, Meadow Fresh milk and yoghurt and MeadowLea butter and margarine.
The group has cut costs, restructured and divested over the past three years to focus on core brands and reduce debt.