Australian food group Burns Philp has confirmed selling the maximum number of shares and getting the top of the price range in its A$2 billion spin-off of Goodman Fielder.
As the Business Herald reported yesterday, the company said the shares would be sold at A$2 a share for Australian investors.New Zealand investors will pay $2.13.
The indicative price range was set at A$1.85 to A$2 in the prospectus.
Burns Philp, 54 per cent owned by New Zealand billionaire Graeme Hart, will retain just 20 per cent of Goodman - at the bottom of the 20-30 per cent range indicated in the prospectus.
"Burns Philp and Rank will be pretty pleased. They got their full amount away and at the top end of the range," said fund manager John Norling of Alliance Capital.
He said it showed reasonable demand and augured well for the listing on the New Zealand and Australian exchanges on Monday afternoon.
Sources said there was aggressive scaling back of allocations for institutions after strong demand in Asia, Europe and the United States.
New Zealand institutions were cool on the float and they might pay the price if they are underweight in the stock and it lists at a 5-10c premium as tipped by some analysts.
With a market capitalisation of A$2.65 billion, the company will have a 2 per cent weighting in the NZX top 50 index and will be ranked 13th largest stock. It will also be in Australia's main index, the S&P/ASX.
The price set means Goodman Fielder was sold at 8.5 times prospective earnings, which means it will pay a minimum of $612 million for Hart's New Zealand Dairy Foods.
That could rise to $885 million by June if the maximum projected cost savings and earnings growth are made by Hart's Rank Group, which is selling NZDF.
Despite the top price being almost double what Hart paid Fonterra for most of NZDF's assets just four months ago, most analysts think it fair.
