Panel tells Goodman bidder Burns Philp to go for it

Speculation remained, however, that Burns Philp might apply to the Australian Securities and Investments Commission to lower the offer price after Goodman earlier this week made the shock disclosure that it could face a $140 million tax liability. Goodman also warned that Burns Philp might incur penalties worth $US40 million ($69.4 million) from inheriting its US debt.

In a statement yesterday, Burns Philp said it did not have enough information to determine whether the disclosures had breached the conditions of its offer.

Deutsche Bank's food analysts wrote in a recent note that ``we believe the announcements are not sufficient to deter Burns Philp but may have given it just cause to offer a lower price".

The bank also said that the surprise liabilities would make it harder for Goodman's board to reject the bid.

Goodman shares gained 3c to $1.75 yesterday, still 5.4 per cent in arrears of the $1.85 bid. Burns Philp was up 1c to 51c.

While lesser clauses were amended or ditched, the Takeovers Panel ruled the most contentious and controversial condition, which requires Goodman's directors to reconfirm the company's historical and forecast earnings and liabilities, could stay.

The decision was viewed as a big boost to the likelihood of the bid's proceeding. If adhered to, it would give Burns Philp greater comfort about the financial health of the target company.

Goodman, on the other hand, wanted the condition removed, arguing that it transferred the risk of the bid to Goodman's directors.

However, a Goodman spokeswoman, Lina Melero, noted the panel gave ``no indication that the directors of Goodman Fielder had any obligation to respond" to the condition.

A Burns Philp spokesman said his company was ``pleased" with what it considered to be a favourable ruling. Investors were of a like mind.

``The offer had plenty of conditions to begin with and some were always going to be challenged," said Stuart Jordan, a portfolio manager with Deutsche Asset Management. ``In the end they haven't had to give too much away."

Burns Philp agreed to withdraw its right to scrap the bid should some material, adverse change befell it or if financial markets fell sharply. The condition relating to financing will be amended so that Burns Philp may now rescind the offer only if its financial backers pull out of the deal first.

Also, Goodman shareholders may withdraw their acceptance of the offer until 10 days after Burns Philp publishes the final terms and conditions of its finance facilities.

Burns Philp described the changes as ``minor" whereas in Goodman's view, the alterations were ``substantial".

Ms Melero said the amendments would give Goodman's shareholders more information and remove some uncertainty about aspects of the offer.