The $200 million sale of Goodman Fielder's flour milling assets is down to
a two-horse race, with competition concerns having knocked grain marketer AWB
out of the running.
South Australian grain handler Ausbulk and a joint venture between Graincorp
and Cargill of the US remain in the bidding, although the loss of AWB is
expected to dampen price competition. Analysts have valued Goodman Fielder's
milling division at $150 million to $200 million.
The company plans to complete the sale and negotiate a supply agreement with
the winning bidder by the end of the year. Final offers are due on the desk of
Goodman Fielder chief executive Tom Park shortly.
Opposition from the Australian Competition and Consumer Commission has ruled
out AWB as a potential buyer. The ACCC is believed to be concerned about AWB,
the country's dominant marketer of grains, taking a leading position in upstream
AWB's enormous control over wheat supply would place it at a great
competitive advantage relative to existing flour millers. Manildra and George
Weston are both opposed to AWB acquiring the assets.
AWB spokesman Peter McBride said the company was interested in the assets and
had held talks with the ACCC, but declined further comment.
According to a confidential information memorandum, Goodman Fielder's Milling
Australia division has about 40 per cent of total flour sales but a 52 per cent
share of sales relating to human consumption. It is forecast to have sales of
$489.3 million in the year ended June 30, 2002 and earnings before interest and
tax of $28.9 million.
The Goodman Fielder documents project 2002-03 sales of $498.4 million and
EBIT of $33.5 million, increasing to $503.4 million in sales for 2003-04 and
EBIT of $35.9 million.
Ausbulk and Graincorp themselves have strong to dominant positions in
sections of the grain storage industry. However, the ACCC may approve an
acquisition by the companies provided they agree to certain undertakings.
An ACCC spokesman declined to comment on the matter. The competition watchdog
might not make a public comment on its deliberations.
Goodman Fielder's preference is for an unconditional offer. A spokesman for
the company said competition concerns had not disrupted the sale.
``The sale process is on track," said Robert Hadler, Goodman Fielder's
corporate affairs director. ``It has been a very competitive bidding process and
we remain confident of completing a deal that adds value to shareholders."
Shares in Goodman Fielder ended 2c lower at $1.68 while AWB was 1c higher at