The transaction is expected to be complete in February

The transaction is expected to be complete in February

Australian food group Goodman Fielder has signed a deal to sell its Champion Milling business in New Zealand to Japan's Nisshin Flour Milling.

The NZ$51m (US$42.4m) deal with the subsidiary of Nisshin Seifun Group is in line with Goodman Fielder's strategy to "optimise" its portfolio and "further strengthen" its financial position, it said today (7 December).

The company has also structured a long-term supply partnership with Nisshin to ensure Goodman Fielder maintains "an efficient supply" of flour and related products for its New Zealand business.

"This transaction is another example of the successful execution of our strategy to divest non-core businesses to enable us to focus our capital and marketing expenditure and our internal resources on our core categories and brands," said Goodman Fielder CEO Chris Delaney.

The transaction is expected to be complete in February.

Goodman Fielder has made losses in its last two financial years and is looking to cut costs. This is the second disposal Goodman Fielder has made this year. In August, the company offloaded its Integro commercial oils business to local grain trader GrainCorp.

In September, Goodman Fielder outlined plans for further reductions in its manufacturing network as part of its efforts to try to revitalise its business and reduce its plant number to 35 from 53.

Goodman Fielder's restructuring plan, which it hopes will re-shape the business and allow it to "reallocate focus and resources", aims to save A$100m (US$101.7m).

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GOODMAN FIELDER TO SELL CHAMPION FLOUR MILLING BUSINESS IN NEW ZEALAND FOR NZ$51M

Goodman Fielder enters into agreement to sell Champion Milling in NZ for NZ$51 million to Nisshin Flour Milling

Long term partnership with Nisshin ensures ongoing efficient supply of flour and related products to Goodman Fielder NZ

Transaction is consistent with Goodman Fielder's strategy to optimise portfolio and further strengthen group financial position Goodman Fielder today announced that it has entered into an agreement to sell its Champion flour milling business in New Zealand to Nisshin Flour Milling Inc. ("Nisshin") and its parent, Nisshin Seifun Group Inc. for NZ$51 million (excluding net cash proceeds of NZ Milling receivables and payables).

The transaction is expected to be completed in February 2013, subject to the satisfaction of conditions. Goodman Fielder Chief Executive Officer, Chris Delaney, said the transaction was consistent with the company's strategy to optimise its portfolio by focusing on its core categories.

"This transaction is another example of the successful execution of our strategy to divest non-core businesses to enable us to focus our capital and marketing expenditure and our internal resources on our core categories and brands. "Together with the sale, we have also structured a long term supply partnership with Nisshin to ensure Goodman Fielder maintains an efficient supply of flour and related products for our business in New Zealand.

"With global scale and expertise in milling, Nisshin brings considerable scope to provide further efficiency and innovation to create value under this long term supply agreement," Mr Delaney said. Goodman Fielder will retain the business where it sells flour to retailers, in-store bakeries and hot bread shops, supported by the flour supply agreement with Nisshin. Nisshin will be responsible for supplying to commercial and industrial customers in New Zealand. Nisshin has indicated its intention to retain all existing staff and will shortly offer new contracts.

Nisshin is the largest flour miller in Japan with a market share of approximately 40 per cent and milling capacity of greater than 8,000 tonnes per day. It has revenues of ¥170 billion (NZ$2.5 billion). The Nisshin group is listed on the Tokyo Stock Exchange (TSE:2002).

Mr Delaney said net proceeds of the sale will be used primarily to repay debt and further strengthen Goodman Fielder's balance sheet. "I am pleased with the significant progress we have made in strengthening our balance sheet as part of our strategic plan. This transaction builds on our other recent initiatives to ensure our group financial position is sufficiently strong and flexible to enable us to pursue our strategic agenda," he said.

Original source: Goodman Fielder