Wilmar to takeover Goodman Fielder for US$180m

Goodman Fielder manufactures food ingredients and consumer branded food for Australasia.

Wilmar International will buy the remaining 50% stake in regional food company Goodman Fielder from Oceanica Developments Limited for a cash consideration of US$180m. It will also buy shareholder loans worth US$95m and could pay US$50m to Oceanica after 2020.

DBS Equity Research analyst William Simadiputra noted that the acquisition of Goodman Fielder’s entire share capital for US$1b was completed in 2015. Goodman Fielder was subsequently delisted from the Australian and New Zealand Stock Exchanges. “Post the acquisitions, Wilmar went through a major restructuring and, among other initiatives, consolidated production sites. The offer represented approx. 7.5x EV/EBITDA,” he said.

The deal is expected to be completed in 4Q2019 and that it will result in First Pacific (the seller) recording a non-recurring loss of about US$280m, noted CGS-CIMB analyst Ivy Ng.

Goodman Fielder is primarily engaged in the manufacturing, marketing and distribution of food ingredients and consumer branded food, beverages and related products; including packaged bread and other related goods, dairy products, flour, edible oils and meal components in Australasia. It owns popular brands including Praise, Olive Grove, Meadow Fresh, Meadow Lea, Flame, Tuckers, Crest, White Wings and Pilot.

Wilmar is of the view that under its full ownership and management, there could be significant improvements in Goodman Fielder’s performance, Simadiputra noted. According to First Pacific, Goodman Fielder posted revenue of US$792m, EBITDA of US$50m, core profit of US$21m for 1H2018, with a total equity of US$613m as of 30 June 2018.

Ng noted that the latest acquisition price (which could hit US$275m-US$325m) is lower than historical costs. “The acquisition is not material as it represents 1.7-2% of Wilmar’s shareholders' funds. However, this is 28-49% lower than Wilmar’s investment value of 50% stake in FPW Singapore Holdings of US$543.4m in its book as at 31 December 2017. We gather that this could be due to the more challenging operating environment GF faces in Australia,” she said.