First Pacific and Wilmar have agreed to buy Goodman Fielder for the new price of 67.5¢ a share plus a 1¢ dividend, 2.5¢ less than the previous offer.
The Goodman Fielder board has backed the deal as being “fair and reasonable” and has entered into a scheme implementation deal with the two bidders.
“In reaching our conclusion to unanimously recommend that shareholders vote in favour of the scheme, the board concluded that the proposal represented an attractive value outcome for shareholders,” Goodman chairman Steve Gregg said in a statement.
“I believe it also represents a positive outcome for our employees, our customers and our consumers. 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.
“Therefore, in the absence of a superior proposal and subject to the independent expert concluding that the scheme is fair and reasonable and accordingly in the best interests of Goodman Fielder shareholders, the board will unanimously recommend that shareholders vote in favour of the Scheme,” he said.
Goodman Fielder has also announced write-downs in its intangibles of between $300m and $400m, “reflecting the challenging trading conditions and outlook in its core baking and grocery businesses”.
The deal values Goodman Fielder equity at $1.34 billion, although the consortium already controls 19.9 per cent.
First Pacific and Wilmar lobbed their initial bid for Goodman in late April, and raised it slightly a few weeks later after the Goodman board held out for a higher offer.
But the two bidders have just performed four weeks of due diligence and while they are not believed to have found any “black holes” in the business, they do have concerns about the amount of investment required to turn it around.
Market sources said First Pacific was more enthusiastic than Wilmar, which might have “walked away” if the board had not agreed to recommend the revised offer.
Goodman’s two largest shareholders, Ellerston Capital and Perpetual Investments, are believed to support the revised offer.
The food group has made a series of profit warnings in recent years including the latest on April 15, just two weeks before the takeover bid emerged.
The deal, which requires investor support of 75 per cent, includes a condition that there be no “material adverse change” in Goodman’s earnings.
Goodman says despite the latest write-downs it “operates comfortably within its banking covenants”.
Singapore-based oils trader Wilmar International is one of the largest food companies in Asia, and also owns substantial assets in Australia’s sugar sector. Hong Kong investment group First Pacific has a market value of $US5 billion.