AUS: Goodman Fielder to sell Integro oils unit to GrainCorp

By Dean Best | 28 August 2012

  • A$170m sale to GrainCorp agreed
  • Cargill had tried to buy business twice
  • Goodman Fielder to focus on "core categories" 
Goodman Fielder indicated last year Integro could be sold

Goodman Fielder indicated last year Integro could be sold

Australian food manufacturer Goodman Fielder has agreed to offload its Integro commercial oils business to local grain trader GrainCorp.

Goodman Fielder announced the A$170m (US$176.5m) deal today (28 August). The company, which is looking to revitalise its business after a challenging two years, said the sale would help it focus on "core categories and brands".

The bread and dairy group announced in November that Integro was one of a number of businesses that were "under review" and could be sold.

In July, US agribusiness giant Cargill pulled a bid for Integro, citing "concerns raised in the market". It was Cargill's second failed attempt to buy the business. In November 2010, Goodman Fielder and Cargill pulled the plug on an initial deal after regulators opposed the transaction.

Goodman Fielder said the A$165m net proceeds from its agreement to GrainCorp would "primarily" be used to reduce its debt and strengthen its balance sheet.

The deal also included a contract for GrainCorp to supply "oil and finished goods" to Goodman Fielder.

Show the press release

 

28 August 2012

GOODMAN FIELDER TO SELL INTEGRO BUSINESS FOR A$170M

? Goodman Fielder enters into agreement to sell Integro for A$170 million to a

consortium comprising GrainCorp and Gardner Smith

? Profit on sale before tax estimated to be approximately A$25 million

? Significant reduction in debt resulting in a stronger balance sheet

? Consistent with Goodman Fielder’s strategy to optimise portfolio and further

strengthen group financial position

? Long term partnership with GrainCorp ensures supply of oil and finished goods to

Goodman Fielder

Goodman Fielder today announced that it has entered into an agreement to sell its commercial oils business, Integro, to a consortium comprising GrainCorp and Gardner Smith for A$170 million (including net cash proceeds of Integro receivables and payables).

The transaction is expected to be completed in early October 2012, subject to the satisfaction of conditions, including employee consultation under applicable New Zealand requirements. By this time it is expected that GrainCorp will have completed its acquisition of Gardner Smith.

The sale does not include the out of home business in Australia, or Goodman Fielder's Asia Pacific fats and oils business.

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.

“We are very pleased with the outcome of this transaction. As we first indicated to the market in November 2011, Integro is a well-performing business; however, given our focus on retail branded categories, it is not core to Goodman Fielder.

“This divestment enables us to concentrate our investment and internal resources on our core categories and brands. We have also structured a long term supply partnership with GrainCorp to ensure Goodman Fielder maintains an efficient supply of strategic raw materials.”

“The proceeds of the sale also ensure Goodman Fielder’s financial position is strengthened further as part of our continuing focus on prudent capital management.”

Concurrent with the sale of the Integro business, Goodman Fielder will enter into a long-term partnership with GrainCorp for the supply of oil and finished goods to Goodman Fielder. Over the medium term, this is expected to further enhance Goodman Fielder's business by delivering a more efficient manufacturing supply chain.

“We have a strong existing relationship with Gardner Smith and GrainCorp, who together offer a secure, vertically integrated partner for the ongoing supply of edible fats and oils to our business,” said Mr Delaney.

“This transaction is also a positive result for the staff at Integro. The combination of GrainCorp’s expertise along the grain supply chain and Gardner Smith’s oils expertise offers significant opportunities to support Integro’s continued growth in the region,” Mr Delaney said.

Goodman Fielder expects to book an estimated profit on the sale of $25 million before tax.

Net proceeds of the sale of approximately $165 million will be used primarily to reduce debt and further strengthen Goodman Fielder’s balance sheet.

“We are pleased to have made further progress in executing our strategic plan and delivering on the objectives we previously outlined to the market,” said Mr Delaney.

“We look forward to outlining our strategy in greater detail on 3 September at our investor day.”

Greenhill Caliburn acted as financial advisor and Freehills and Bell Gully acted as legal advisors to Goodman Fielder.

 

Original source: Goodman Fielder

Sectors: Bakery, Commodities & ingredients, Dairy, Mergers & acquisitions

Companies: Goodman Fielder, Cargill

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