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The Sydney Morning Herald

Dispute over Goodman sale

Author: Philip Hopkins
Date: 05/08/2002
Words: 431
          Publication: Sydney Morning Herald
Section: Business
Page: 35
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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