Hart adds yeast to Goodman Fielder mix

By Hugh Stringleman

Friday 20th December 2002

Graeme Hart's audacious bid for Australasian food giant Goodman Fielder, if successful, will form a powerful union of milling, baking and dairy foods with $1 billion of turnover in New Zealand and a further $4 billion in Australia.

Through his Rank Group, Mr Hart, a Kiwi, is majority owner of Burns Philp, the listed food ingredients company that secured 15% of Goodman Fielder shares late last week. Burns Philp has offered $A1.85 a share for the rest of Goodman Fielder, which has a market capitalisation of $2 billion.

He bought New Zealand Dairy Foods from Fonterra Co-operative Group and dairyfarmer shareholders earlier this year, paying a total of $245 million.

Goodman Fielder and New Zealand Dairy Foods produce many well-known food brands on both sides of the Tasman, including Quality Bakers breads, Bluebird snack foods, Champion flours, Flemings oaten products, Irvine's pastries, DYC vinegars, Anchor dairy foods, Fresh 'n' Fruity yoghurts, Chesdale and Puhoi cheeses, Meadow Lea spreads, Uncle Toby's cereals, Patak's sauces, Diamond pastas, Ernest Adams cake mixes and Edmonds cooking ingredients.

The Burns Philp takeover would also restore to majority New Zealand ownership the Goodman Fielder group built in the 1980s by brothers Sir Patrick and Peter Goodman, who began their corporate careers in Nelson.

Goodman Group merged with Australia's Fielder Gillespie Davis and Allied Mills in 1986 and took in Wattie's for a time before selling that canned and frozen foods company to Heinz.

The head office of Goodman Fielder moved to Australia, where more than three-quarters of its business is done.

Former Dairy Board chairman Sir Dryden Spring is deputy chairman.

Goodman Fielder still has 12,000 Kiwi shareholders and is the largest flour milling and bread baking business in this country.

With two large mills in Mt Maunganui and Christchurch, it produces 70% of the flour used in bread making and has giant bakeries in Auckland, Wellington and Christchurch.

In the latest annual report, for the year to June 30, Goodman Fielder in New Zealand had an annual turnover of $567 million and contributed $75 million (26%) to the group ebit of $282 million.

New Zealand Dairy Foods operates from Takanini, in Auckland, and controls slightly under half of the domestic dairy foods market. Fonterra owns most of the rest of the market, through Mainland Foods, plus extensive dairy market interests in Australia.

Goodman Fielder recently sold its Australian milling business to GrainCorp and Cargill Australia for $220 million.

Graeme Hart began working life as a panelbeater, went into business as a tow truck operator, formed a printing firm, took over the Government Printing Office and then Whitcoulls and cashed up and bought into Burns Philp, to effect a financial turnaround.

He is now listed as New Zealand's richest man (National Business Review Rich List) with a personal fortune estimated at a minimum $1.2 billion.

On Tuesday Burns Philp briefed investors and the media on the debt dimensions of its takeover bid for Goodman Fielder.

On completion, Burns Philp would owe $3 billion at an average interest rate of 7.75%.

The combined group would have assets of $5 billion in a diverse portfolio of food businesses with highly regarded brands and stable and predictable cashflows.

The offer closing date will be in February.

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