Weaker kiwi gives lift to Goodman Fielder shares

Graeme Hart

Shares in transtasman food giant Goodman Fielder got off to a solid start yesterday as the company returned to the Australian and New Zealand exchanges after a two-year break.

In Australia, the shares opened up 6Ac on the A$2 ($2.15) issue price, but later settled to end at A$2.04.

New Zealand investors benefited from a weakening of the New Zealand dollar against the Australian currency, the shares rising from their $2.13 issue price to as high as $2.25 before ending the day at $2.20..

CommSec senior analyst Grant Saligari said Goodman Fielder, whose products here include Molenberg and Vogel's bread and the Meadow Fresh and Tararua dairy brands, was helped by the scarcity of large-scale listed food groups on the exchange and strong marketing of the stock internationally.

"If you look at Australian food manufacturing and you want to be exposed to that sector, you do not have too many major options. Goodman Fielder is clearly the biggest company in its sector," he said.

Tony Pigou, head of ABN Amro Rothschild equity capital markets, which managed the float in New Zealand with First NZ Capital Securities said: "I think it is a great start for the company."

Goodman Fielder has its roots in the Nelson-based Goodman baking dynasty. It was delisted from the Australian and New Zealand stock exchanges in 2003, after billionaire Graeme Hart's Australian vehicle Burns Philp made a A$2.25 billion takeover. The new business is a combination of that business, excluding the Uncle Toby's snack foods arm, and dairy assets belonging to Hart's private company Rank.

The float values Goodman at A$2.65 billion and raises A$2.12 billion.

The deal also crystallises a gross profit of as much as $900 million for Hart's investments in the dairy assets.

He bought them for $310 million in 2002 and, after a series of deals, including yesterday's float, he exits for a price between $950 million and $1.2 billion. The final price will be determined by the performance of the assets over the next year.

Westpac Custodian Nominees, holding 26.75 per cent of Goodman, appears as the single largest shareholder. But it provides clearing, settlement and safekeeping services to a large range of international clients, including the Westpac Financial Services groups.

Westpac is closely followed by Burns Philp. It sold down its stake to 20 per cent in the float, but it could have retained as much as 40 per cent of the business.

Rounding out the top five are JP Morgan, with 11.3 per cent, National Nominees, with 7.46 per cent, and UBS Nominee, with 1.79 per cent.

Sources have previously said there was aggressive scaling back of allocations for institutions after strong demand in Asia, Europe and the US.

Local fund managers, many of who were luke warm on the issue and could have been scaled back, may have to buy stock to match the weighting Goodman will have in the NZX-50 capital index.

With a market capitalisation of A$2.65 billion, the company will have a 2 per cent weighting in the NZX-50 index and will be ranked the 13th largest stock. It will also be in Australia's main index, the S&P/ASX.

Retail investors got a maximum of 1000 shares, no matter how many they sought. An application for the minimum amount allowed, $2000, would result in an investor being allocated 937 shares. Those spending $2500 or more would get 1000 shares, worth $2130 at the IPO price of $2.13 a share.

The company expects profit to rise 10 per cent and 14 per cent in the next two years.

Index weighting

* With a market capitalisation of A$2.65 billion, the company will have a 2 per cent weighting in the NZX-50 index.

* It will be ranked the 13th largest stock.

* It will also be in Australia's main index, the S&P/ASX.

- Additional reporting agencies