ACCC clears Goodman Fielder takeover
BUSINESS SPECTATOR SEPTEMBER 25, 2014 9:53AM
Mitchell Neems
Business Spectator Reporter
Melbourne
THE consumer watchdog will not oppose First Pacific and Wilmar’s $1.9 billion takeover of Goodman Fielder, concluding there is little possibility of the deal resulting in higher prices for packaged vegetable oil.
The Australian Competition and Consumer Commission (ACCC) said its review had predominately focused on whether as a result of the proposed acquisition, Wilmar or Goodman Fielder would be able to raise the prices of packaged vegetable oils.
“The ACCC determined that, following the proposed acquisition, Wilmar and Goodman Fielder would continue to be competitively constrained by alternative existing and potential suppliers,” ACCC chairman Rod Sims said.
Wilmar and Goodman Fielder overlap in the supply of packaged edible oils to Australian retailers.
Goodman Fielder is the largest supplier of branded packaged edible oils to retailers, while Wilmar supplies imported packaged oils, which supermarkets sell under their private labels.
Mr Sims noted that packaged vegetable oil can be readily imported from international suppliers.
“Wilmar currently supplies oil from its offshore facilities and there are other international suppliers capable of supplying the Australian market,” he said.
The ACCC also concluded the takeover was unlikely to raise competition concerns in any other markets in which Goodman Fielder or Wilmar are active.
Earlier this month, Goodman Fielder said the takeover would 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, 2015.
Lower milk prices ‘will boost Goodman Fielder’
THE AUSTRALIAN SEPTEMBER 30, 2014 3:30PM
Bridget Carter
Mergers and Acquisitions Editor
Sydney
THE chief executive of Goodman Fielder, Chris Delaney, says lower milk prices should offer a lift to the business ahead of its likely takeover by its Asian suitors.
However, discussions are yet to take place with the company’s prospective owners as to whether Mr Delaney will remain as chief executive.
The food manufacturer, which sells prominent brands of dairy, breads, dressings and food ingredients to Australian and New Zealand supermarkets, is soon likely to be purchased for $1.3 billion by Singaporean agribusiness giant Wilmar Holdings and its bid partner First Pacific.
While the deal last week received competition clearance, it still needs approval from the Foreign Investment Review Board and from its shareholders.
This would likely see the sales process drag into next year, Mr Delaney, speaking after an American Chamber of Commerce event in Sydney today, said.
“The deal is going to get done when the regulators are ready for it,” he said.
“It has not been finalised as to whether I stay on. My mind is very open.”
Mr Delaney said the lower milk price had offered a lift to the company’s New Zealand dairy operations.
“I think what we need to watch is where the price goes,” he said.
“We are still making up for the losses last year as an industry, but at some point, we will start to see pressure on prices.”
Shares in Goodman Fielder were trading 5c higher to 62.5c each before the market close.
CEO Delaney believes he's good man for the top job
Tim Binsted
612 words
1 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Goodman Fielder chief executive Chris Delaney said he wants to stay in the job if the breads and spreads maker is acquired by its foreign suitors as he downplayed concerns over Woolworths' aggressive move to cut Homebrand white bread to 85¢ a loaf.
The maker of Wonder White bread and Meadow Lea margarine has recommended a $1.3 billion takeover bid from Singapore oils trader Wilmar International and Hong Kong investment company First Pacific.
Last week the Australian Competition and Consumer Commission gave the deal the green light even though it will increase Wilmar's share of the edible oils market to more than 50 per cent.
Speaking on the sidelines of an address to the American Chamber of Commerce in Sydney on Tuesday, Mr Delaney said he wants to stay in the CEO role if the deal goes through.
"That has not been finalised. My mind is very open. I would love to stay to finish what I've done and I think there's good intentions there but we haven't sat down and had that conversation yet," he said.Price cut war
The ACCC approval comes in the wake of Woolworths' decision to cut the price of Homebrand white bread by 15 per cent to 85¢ a loaf as part of its Cheap Cheap campaign. Coles and Aldi were quick to follow the price cut.
"We have been living with dollar bread for three years plus and the majority of our brands are selling at a significant premium to that," Mr Delaney said. "Obviously deflation in the opening price point of the category is a challenge. I understand the retailers own the brand and they have the right to price it where they want to price it."
Goodman Fielder's biggest and fastest growing Australian brand, Helga's, has been selling at a weighted average price of $3.80 over the past six months.
"It has been sustaining a premium and premium brands need to do that...We will defend our brands as we need to. There is a place for 85¢ bread [but] it's too early to comment about what the impact is," Mr Delaney said.
Goodman Fielder is also facing pressure from the recent introduction of $1 a loaf house brand bread in New Zealand, where private label penetration is deeper than in Australia.
Goodman Fielder said at the start of September that a shareholder meeting to approve the scheme of arrangement was now expected to be held in the first quarter of calendar 2015 and the scheme end date had been postponed from December 31 to March 31.Buying time
The delays sparked rumours that Wilmar and First Pacific are buying time so they can see the impact of cut-price bread on their target's earnings.
The bidders have the right to walk away from the offer if Goodman Fielder's earnings before interest and tax fall $30 million or if the value of net assets falls by $100 million, triggering a material adverse change clause.
As well as pressure from its supermarket customers Goodman Fielder has been struggling against soaring milk prices that halved margins in its dairy business last year. Fonterra's big cut to its milk price last week should stem the pain in the dairy.
Wilmar and First Pacific are now awaiting clearance from the Foreign Investment Review Board and the Ministry of Commerce in China before proceeding with the offer.
The bidders are offering shareholders 67.5¢ a share. Goodman shares closed at 62.5¢ on Tuesday, reflecting uncertainty about the deal closing.
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Document AFNR000020140930eaa10003f
Reiterate Buy on buyback, attractive on risk / reward
FIRB blesses foreign takeover of Goodman
THE AUSTRALIAN OCTOBER 22, 2014 12:00AM
Eli Greenblat
Senior Business Reporter
Melbourne
A TICK of approval from China’s Ministry of Commerce looks to be all that stands between Singaporean oils trader Wilmar International and Hong Kong investment company First Pacific seizing control of Goodman Fielder and its portfolio of brands that include Meadow Lea, Helga’s, Mighty Soft and White Wings.
The Foreign Investment Review Board gave its blessing to the $1.3 billion takeover of Goodman Fielder by the overseas partners, saying it had no objection to Wilmar and First Pacific seizing control via a scheme of arrangement.
It follows last month’s decision by the Australian Competition & Consumer Commission not to intrude in the takeover of the bread, spreads and sauces business, even though the purchase would lift Wilmar’s share of the local edible oils market to more than 50 per cent.
The takeover, launched in April, has gone through a lengthy approval process with some expecting it to be significantly delayed as regulators across Australia, New Zealand and China trawled through the deal.
In September the takeover was postponed, not for the first time, because of regulatory delays in China.
As a result, Goodman Fielder and the bidders were forced to extend the takeover end date from December 31 into the first quarter of next year, March 2015, when a shareholder meeting will vote on the scheme.
It is expected shareholders will vote in favour of the scheme of arrangement — even though the takeover price was lowered by 2.5c per share after Wilmar and First Pacific inspected Goodman Fielder’s books.
Goodman Fielder will hold its annual general meeting on November 20 where an update for investors, including potentially an approval by the Ministry of Commerce, could be announced.
Shares in Goodman Fielder ended up half a cent yesterday at 62.5c, a discount to Wilmar and First Pacific’s 67.5c a share offer.
Continued delays into finalising the takeover comes as Goodman Fielder and other bread suppliers face intense competition within the supermarket channel, where the introduction of private label bread as low as 85c a loaf threatens sales of branded bread such as Helga’s and Mighty Soft.
New Zealand shoppers have also been tempted with the introduction of $1-a-loaf bread.
But it is believed Goodman Fielder’s suitors are more interested in the food company’s potential in Asia than earnings it harnesses from the challenging Australian and New Zealand supermarket sector.
Wilmar, one of Asia’s leading agribusiness companies and the world’s largest processor and merchandiser of palm and lauric oils, has more than 450 manufacturing plants and a distribution network that feeds into China, India, Indonesia and 50 other countries.
Stock price rebounded from near 3.00 (17 Oct) to 3.20.
Hopefully good news coming up in 11 Nov financial announcement.
Vested
Unilever Q3 revenue in China is down 20%. This does not bode well for its laurics business. Plus CPO and soy bean oil prices on the down trend in the past 2 qtrs, the outlook for Wilmar looks murky..
Based on what I have gathered,
- Agree Palm and Laurics will be bad or so-so
- Think the Sugar segment will help due to seasonal contribution
- Unsure about Soybean segment - given soybean is their input, had thought falling soybean prices would help their margins
Vested
China constitutes more than US$10b of the annual revenue , it wont be positive to Wilmar in the forseeable future. Chinese Gov also have control over staple product prices.
http://www.businesstimes.com.sg/companie...at-us4224m
Wilmar's Q3 profit up 1.5% at US$422.4m
By
Andrea Sohsandrea@sph.com.sg@AndreaSohBT
wilmaroilbottles1211.jpg Wilmar's consumer products and plantations and palm oil mills divisions also notched up higher pre-tax profits of US$75.1 million and US$86.3 million, respectively, on greater sales volumes. PHOTO: BLOOMBERG
12 Nov5:50 AM
Singapore
DESPITE a dip in revenue, third quarter net profit for Wilmar International rose 1.5 per cent to US$422.4 million, boosted by other operating income and results from associates. This translated to earnings per share of 6.6 US cents, up from 6.5 US cents a year ago.