Goodman weighs break-up

Rumours swept through the market on Friday that Goodman Fielder had lined up buyers for each of its other business units, comprising its consumer foods, New Zealand operations and international assets.

The deal, which would break up the company behind brands such as Uncle Tobys, Meadow Lea and Buttercup, rests on the sale of the baking assets, with buyers baulking at a $500 million price tag.

Adviser Macquarie Bank is thought to be pushing for a transaction that would realise at least $2 a share, valuing all of Goodman Fielder at $2.4 billion.

The company's directors have rejected Burns Philp's $1.85 a share offer as ``opportunistic" and ``inadequate".

It was also rumoured that a separate deal valuing Goodman Fielder shares at $2.05 collapsed at the last minute.

Macquarie Bank has recently approached private equity firms to gauge their interest. International foods groups such as Nestle, ConAgra, General Mills, Associated British Foods and Thai President Foods have been mooted as possible buyers for parts of Goodman Fielder.

The high-margin consumer foods business, which includes Uncle Tobys and Praise, has attracted much interest. Baking, though, has faced increased commodity costs and a lack of pricing power for bread in the latter stages of 2002.

Earlier this month Goodman Fielder chief executive Tom Park warned that full-year earnings for the baking group would fall.

There was some hope for relief, with the group confirming last week it would push through a 5 per cent price rise to ease pressure on margins, after George Weston did likewise in December.

However, the market remained sceptical of Goodman Fielder's capacity to draw out another bidder, given that analysts think Burns Philp is already offering a fair and full price.

Most large shareholders are considered certain to sell to Burns Philp, although it isn't known what fund manager Maple Brown Abbott intends to do with its 13 per cent holding.

Goodman Fielder shares eased 3c to $1.73 on Friday, a 6.5 per cent discount to the bid.

``The market is telling you it doesn't think there's another bid happening," one analyst said.

Burns Philp's offer closes on February 18. Goodman Fielder is required under the Corporations Act to update the market on its progress in finding a rival buyer sometime between February 4 and February 11.

Meanwhile, a decision by the Takeovers Panel on an application from Burns Philp is believed to be imminent.

Burns Philp is seeking to force Goodman Fielder to disclose more information about a potential $140 million tax liability as well as other aspects of its financial history and forecasts.

There are concerns Burns Philp may withdraw its offer if Goodman Fielder doesn't comply.