Goodman Fielder, Australia's largest food company, has today rejected a hostile bid by international yeast and ingredients company Burns Philp. Goodman Fielder advised its shareholders to spurn the bid because "the offer does not adequately reflect the company's underlying value and ongoing potential".
According to a statement issued by the food company today, the Burns Philp offer is inadequate and opportunistic given that the implied control premium is only around 10-15 per cent above the share price during the three month period before 6 September 2002.
"The offer price of $1.85 does not reflect an appropriate acquisition price for control of Goodman Fielder," said the company.
In addition, the bid is highly conditional, warned the company, and fails to provide a sufficient degree of certainty for Goodman Fielder shareholders that the offer will be actually be completed.
Burns Philp, looking to build critical mass, launched a A$2 billion (€1.1bn) takeover bid of Goodman Fielder at the end of last year.
Goodman Fielder's chairman, Dr Keith Barton said:"We believe the bid does not adequately compensate shareholders for the underlying value of Goodman Fielder and its ongoing potential.
"The offer price does not reflect an appropriate acquisition price for control of Goodman Fielder. The bid is opportunistically timed given the impact of short term commodity price increases, primarily caused by drought conditions."
Barton added that the 'new' Goodman Fielder retail branded strategy that commenced in mid-2001 was creating significant value and was expected to deliver further benefits to shareholders. At the same time, he stressed that the company's key performance and financial indicators of economic profit and return were continuing to improve.
Significantly, Barton underlined to shareholders the fact that the company was currently undergoing discussions with other potential bidders - moves that could lead to alternative proposals.
The bidder declined to comment immediately on the Goodman Fielder position.
It is now up to the shareholders of Goodman Fielder to consider between the conditional A$1.85-a-share cash offer from Burns Philp or the company's suggestions that the future looks brighter ahead.