Asian interests' takeover offer for food giant tipped to be start of new buyout phase.

Singapore's Wilmar International and Hong Kong's First Pacific have launched a A$1.27 billion ($1.38 billion) joint takeover bid for Australasian food group Goodman Fielder, in what analysts say could herald the start of a new phase of mergers and acquisitions on both sides of the Tasman.

Goodman's dual-listed shares rose A10c to the A65c a share offer price on the ASX, up from a 12-month low of A47.5c in February but down from last October's high of A76c.

The offer price represents an 18 per cent premium to last week's closing price on the ASX of A55c. The non- binding, conditional offer is through a scheme of arrangement.

Analysts' initial assessment was that the offer price was too low. The Goodman board said the offer "materially undervalues" the company.


Mark Lister, head of private wealth research at Craigs Investment Partners, said the bid appeared to be opportunistic, given the stock was now back to where it was just a month or so ago before it started to fall on the back of a profit warning.

Analysts said they expected the bid to be drawn out, with pressure likely to fall on the Asian parties to up the ante.

"It's unlikely to be successful at these levels," Lister said. "If the bidders are serious, they will have to engage with the other major shareholders and probably the Goodman board."

He said the trend of more merger and acquisitions had started in the US and UK, but had been slow to filter down into Southern Hemisphere markets.

Shane Solly, portfolio manager and research analyst at Harbour Asset Management, said he expected to see more activity along the lines of the Wilmar-First Pacific bid as confidence continued to build.

"Is there potential for more acquisitions? Yes, there is."

Lister agreed that the Wilmar-First Pacific action was a sign of the times.

"I think that corporate/merger and acquisition activity will ramp up over the coming two years."

Immediately after the global financial crisis, corporates raised extra capital to shore up their balance sheets. Lister said it had taken five years, but that a post-crisis reluctance to embark on big deals appeared to be thawing.

Wilmar said the proposed transaction represented an opportunity to create a leading Asia-Pacific agricultural and consumer staples company.

Goodman's dual-listed shares have shed about two-thirds of their value over the past five years as the company has struggled to perform. In February, Goodman forecast normalised annual earnings to be broadly in line with the previous year's A$185.6 million as soaring milk prices and competition in baking goods eroded profitability.

Goodman is the company behind Vogel's bread, Meadowfresh milk and yoghurt, and Meadowlea butter. The company has been cost-cutting, restructuring and divesting over the past few years, focusing on its core brands and on reducing debt.

Among the biggest shareholders listed in the last year's annual report are Ellerston Capital with 213.9 million shares and Harris Associates LP with 140 million. Wilmar's initial offer last year, which netted 10 per cent of the company, was at A60c a share - a 16.5 per cent premium to its market price.

Goodman Fielder was once controlled by New Zealand billionaire businessman Graeme Hart, who relisted the company in 2005 and used the proceeds to buy Carter Holt Harvey.

Coincidentally, Hart's Rank Group said over the weekend that it had sold Carter Holt's pulp and paper and packaging businesses for $1.037 billion to Japan's Oji Holdings and Innovation Network.