Brumby's bakeries backs bid by retail food group

By NZPA

Tuesday 15th May 2007

Retail Food Group Ltd (RFG) will likely be taking Brumbys Bakeries Holdings Ltd into its stable of franchises after the baker's board unanimously recommended its takeover bid today.

At the same time, Brumbys' managing director of seven years, Michael Sherlock, is stepping down, following a decision by a syndicate with which he is involved not to compete with the RFG bid.

Sherlock's syndicate, BBS, also comprising Brumbys' company secretary Steve Brown and independent director Marcus Barlow, have decided to support the cafe and donut brand owner's bid for Brumbys at $A3.40 ($NZ3.87) per share, which was announced at the beginning of the month.

Sherlock said that BBS's decision was made after RFG announced earlier this month that it had already secured 15.59% of Brumbys stock, valued at $A6.82 million, previously held by River Capital.

"River Capital selling its shares to RFG meant it was extremely unlikely that BBS could secure 100% ownership of BBH," Sherlock said.

"BBS decided not to proceed further with its takeover bid which had offered an aggregate value per share of $A3.30."

Sherlock said he was extremely proud that he had presided over a business strategy that had seen Brumbys' share price rise from $A0.55 to an offer of $A3.40 in three years.

"When I took over as managing director seven years ago, Brumby's performance was suffering from board infighting and poor management," he said.

"Since then Brumby's has produced record results, grown to more than 320 stores across Australia and New Zealand, launched its Brumby's Go stores, expanded into supermarkets and airports and initiated steps to establish Master Franchisees in other countries including the Middle East."

"The price of $A3.40 is more than six times what Brumby's was valued at when it listed on the Bendigo Stock Exchange (BSX) three years ago at $A0.55 per share."

RFG currently has 287 Donut King outlets in Australia and 71 bb's cafe outlets in Australia and New Zealand.

Retail Food Group units last traded at $A1.40.

Comments from our readers

No comments yet