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Leading flour miller the Manildra Group has attacked bids by three big
Australian grain companies to buy the milling assets of the nation's largest
food company, Goodman Fielder.
NSW-based Manildra says the bids by AWB, GrainCorp and Ausbulk contravene
competition principles. Manildra is a rival of Goodman Fielder.
Manildra general manager John Campbell said that AWB, GrainCorp and Ausbulk
were suppliers to his company.
If any of them bought Goodman Fielder's assets, they would become competitors
and would have the potential to control Manildra's input costs. These related
to wheat, storage, transport, handling and associated services.
Mr Campbell said wheat was crucial to most of Manildra's operations, be it
flour milling, starch production or ethanol and methanol production.
``In fact, wheat amounts to some 70 per cent of the cost of flour, and flour
is the basic ingredient for starch and ethanol," Mr Campbell said.
He said Manildra had wanted to bid for the assets but was excluded.
``We are very dubious about the thoroughness of the tendering process," he
said. A preliminary information sheet had been sent to selected parties last
December, with the date for submissions of interest arbitrarily set at January
11.
The Australian Competition and Consumer Commission said in March that
Manildra's acquisition of all of Goodman Fielder's assets might raise
competition issues in NSW and Victoria. Manildra would probably have to divest
itself of assets, the ACCC said.
Goodman Fielder justified the exclusion of Manildra on these grounds.
Manildra's chairman, Dick Honan, said his company had been occupied with the
purchase of George Weston's Bioproducts division early in January and did not
want to deal with ACCC issues until the purchase was completed. This occurred on
February 21.
Mr Honan said Goodman Fielder had not required any of the three bidders to
obtain ACCC clearance before even receiving the information package.
He said Manildra had no competition concerns about GrainCorp's partner,
Cargill, or another potential bidder, Archer Daniels Midland.
Goodman Fielder's chairman, Keith Barton, said in a letter to Manildra last
month that confidentiality would not allow the company to say whether the
bidders had to obtain ACCC clearance.
Mr Honan said that if the ACCC allowed AWB, GrainCorp or Ausbulk to proceed
with their bids, Manildra would consider other options.
``The ideal situation for Manildra is the status quo," he said.
Goodman Fielder's flour-milling assets, 13 mills in all states, are valued at
$150 million to $200 million. Goodman controls more than half of the flour
market for human consumption in Australia.
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