Burns Philp on course with Goodman bid

By PHILIPPA STEVENSON

Burns Philp yesterday cranked up its $2.4 billion hostile takeover bid for Goodman Fielder when it completed all its financing arrangements, waived accounting conditions and cleared its last regulatory hurdle.

The herb and spice company controlled by New Zealand billionaire Graeme Hart also extended the deadline for the A$1.85 a share offer until March 14.

Even before it cleared the conditions, analysts described the price for Australia's largest food company as still the best in town.

The Commerce Commission yesterday cleared Burns Philp to take over Goodman Fielder as long as it sells the yeast business of subsidiary New Zealand Food Industries.

Burns Philp said it would drop the yeast operation provided it completed the Goodman Fielder acquisition.

The Auckland plant is New Zealand's only fresh yeast manufacturer, supplying all the fresh yeast used by the local baking industry.



Commission deputy chairwoman Paula Rebstock said analysis of the bread and yeast markets was complex because the effect of the merger would be to link yeast supplier NZFI and purchaser Goodman Fielder, the country's biggest bread producer.

The commission was satisfied that the proposed acquisition would not substantially lessen competition in the other markets considered - yellow spreads such as mar-garine and butter, and packaged bread.

Burns Philp said yesterday that it had completed term loan facilities for A$561 million ($600 million), and had the cash from a US$210 million ($375 million) senior subordinated notes issue - developments that finalised its funding arrangements.

After Goodman Fielder's half-year result report last week, Burns Philp said it would waive the bid's accounting conditions.

A cut-off supplementary bidder's statement would go to Goodman Fielder shareholders next week.

Goodman Fielder, which is fighting the Hart bid, suffered another blow to its defence this week when a previously undisclosed application to the Takeovers Panel was rejected.

The company applied to the panel on Wednesday to make Burns Philp reveal exactly how it was financing the $2.4 billion bid.

But the panel said there was no basis for declaring "unacceptable circumstances", a ruling which can end a takeover.



And the panel knocked Goodman Fielder's own level of disclosure.

"The panel considered that Goodman Fielder shareholders are also waiting on advice from Goodman Fielder itself on the alternative proposals which it has been advising its shareholders that it is currently negotiating."

The application was the second by Goodman Fielder to the panel, and neither has prompted the panel to intervene.

ABN Amro said this week that Burns Philp's A$1.85 a share bid for Goodman Fielder remained the best price in town.

"Goodman Fielder has continued to pin its hopes on fruitful discussions with potential counter bidders, but our view on this is that the clock is ticking," said analysts David Cook and Peter Kormendy.

"The announcement of a special dividend, to be paid in a tax-inefficient manner, suggests the chances are diminishing."

On Wednesday Goodman Fielder announced a 20Ac a share unfranked special dividend, which returns A$238 million in excess funds to shareholders.

In total, Goodman Fielder will have returned A$406.8 million of A$800 million raised from asset sales since July 2001.

"Management should be applauded for returning excess balance sheet capacity to shareholders," said ABN Amro, "but we are concerned, however, that a special dividend is the least efficient method available."