FACE-SAVING was the name of the game as Wilmar and First Pacific agreed to pay $47.5 million less than originally planned for their $1.9 billion acquisition of Goodman Fielder.
The original deal was struck at 70c a share plus a 1c a share dividend. The new deal was struck, at 67.5c plus a 1c a share dividend, or a grand 2.5c a share lower bid for the 1.955 billion shares on issue.
The bidders already spoke for 20 per cent of the company, the last 10 per cent costing 70c a share, so the nickel and dime play was for the other 80 per cent it didn’t own.
Goodman has $549 million in debt and is in need of a massive recapitalisation with around $350 million in capital expenditure planned in the next couple of years.
The plan now is for the scheme booklet to be sent to shareholders in September with a meeting planned for November, and with that Goodman’s inglorious nine-year reign as a public company will be over.
Technically it will be split between the publicly listed Wilmar and the publicly listed First Pacific but just how much detail they will share on the company going forward remains to be seen.
Before you listen to tales of gloom emerging from the due diligence room, remember when Wilmar lawyer La-Mae Teo rang Goodman’s Stephen Gregg on Friday night to tell him the bid price must be lower the final difference was 2.5c a share, or $47.5 million, on a $1.9 billion deal.
It’s not a big gap.
So what kept everyone up all night last night seems to have been arguing the fine details on the governance arrangements between the two sides with everyone stationed in their own offices scattered throughout the world.
In Australia John Knox from Credit Suisse and Tony Damien from Freehills were working with Goodman chair Stephen Gregg and chief Chris Delaney who had returned early from his son’s wedding in the US for the occasion.
Wilmar had UBS’s newly promoted Kelvin Barry and Gilbert &Tobin’s Peter Cook in its corner.
Goodman was floated by Credit Suisse in 2005 at $2 a share and has struggled ever since, being a collection of business’s that New Zealand billionaire Graeme Hart couldn’t sell plus his undersized New Zealand dairy business.
This year Delaney, who had pressed all the right buttons, was hit by a combination of a $20 million increased in dairy costs due to the milk price rise and a series of shutdowns in his under-invested bakeries.
When you are trying to handle the supermarket behemoths and commodity prices that combination proves terminal.
The question now is what Wilmar and First Pacific do next with what is essentially a collection of different businesses ranging from chooks in Fiji to Meadowlea spreads and Helgas bread in Australia.
Back in Singapore Wilmar has worked overtime trying to satisfy all concerns over its status as the world’s biggest palm oil producer.
In Australia it is also fighting sugar farmers over its move to bypass them to market its sugar directly offshore.
The plan is to take the Goodman assets to Asia and that will be a boon to all concerned.
That is if the plan works.
Source: The Australian