Goodman Fielder IPO price set at $2 per share

By NZPA

Thursday 15th December 2005

Goodman Fielder said today the price for its IPO has been set at $A2.00 ($NZ2.16) per share.

The company spinning off Goodman Fielder, Burns Philp, controlled 54% by New Zealand billionaire Graeme Hart, will retain 20% of Goodman.

The price is at the top end of the $A1.85-$2.00 range set out in the prospecutus while the shareholding retention by Burns Philp is at the bottom of the 20-30% range.

New Zealand shareholders will have to pay $NZ2.13 per share.

Goodman, bread, butter and edible oils company, said the pricing reflected strong demand from retail investors in Australia and New Zealand, and institutions globally.

The final price was set following a three-day institutional book-build (tender process), the company said.

Based on the final price, Goodman will have a market capitalisation of $A2.65 billion and, subject to meeting S&P/ASX index inclusion criteria, will be included in the S&P/ASX 100 share index and the NZSX-50 index, making it the largest publicly listed food company in Australia andNew Zealand.

The company said it expected to declare a final dividend for shareholders 2005/6 year of A5.5 cents per share (for the half year period), increasing to 13.5 cents per share in fiscal 2007.

These forecast dividends represent an annualised yield of 5.5% and 6.8% respectively, based on the final share price.

"Support for the offer has been widespread across leading international institutions, domestic fund managers and retail investors," Goodman chief executive Peter Margin said.

"Goodman Fielder offers investors a combination of market leading brands with tremendous upside and growth potential which will be led by an experienced management team and board," Margin said.

Goodman shares are due to list on Australian and New Zealand stock exchanges at 2pm (NZT) on Monday.

From Monday, retail and priority offer applicants will be able to find out how many shares they were allocations.

Some analysts have been surprised at the extent of the demand for Goodman, which has purchased New Zealand Dairy Foods from Hart's Rank Group for an estimated $800-900 million - over three times the price he paid for it three years ago.

"It was a bit surprising to see it priced at the top end," said David Wong, head of equities at IAG Asset Management. "The offshore guys led the charge, forcing local investors to bid higher."

His fund had bid for the Goodman IPO.

"Typically, you leave something for the secondary market," he added.

Burns Philp last month rejected an offer by a Bain Capital Partners-led private equity consortium to buy Goodman and elected to go with the IPO.

Burns Philp shares closed up 2.7% at $A1.13 in a stronger overall market yesterday. The IPO is being managed by Credit Suisse First Boston, UBS and Macquarie Bank Ltd.

The successful completion of the three offers will take the Australian IPO tally for 2005 to $A14.34 ($NZ15.50) billion, the highest since 1997, according to Thomson Financial.

The number of companies that hit the market this year totalled 171, the highest in more than a decade and compared with just three in New Zealand.

The operations to be spun off in Goodman comprise Burns Philp's baking division and spreads and oils division, as well as the NZDF.

"Looking at the growth prospects, it doesn't appear to have a demanding P/E (price-to-earnings ratio)," IAG's Wong said.

Goodman's pro-forma Ebitda (earnings before interest, tax, depreciation, and amortisation) for the year to June 30 2006 is forecast at $A416.9 million, rising to $A466.0 million in fiscal 2007.

The float marks the return of Goodman to the Australian and New Zealand stock exchanges after the once underperforming company was taken over by Burns Philp in 2003 and transformed through a cost-cutting programme.

Its New Zealand brands include Edmonds, Kiwi, Vogel's, Meadow Fresh, Taurarua, Anchor butter, Irvines, Champion and Molenberg.

In Australia it sells Wonder White, Mighty Soft, Vogel's, and Helga's breads, Meadow Lea margarine and Pampas pastry.

In August, NZDF did a brand swap with Fonterra where the Anchor milk brand and the Fresh'n Fruity yoghurt brand were sold for Meadow Fresh, Taurarua and the Kiwi smallgoods. Mr Hart got the brand swap and $338m in cash - $28m more than he paid for all of NZDF.

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