Bread maker Goodman Fielder Ltd (ASX: GFF) saw its shares sink 3.7% to 65.5 cents, after the company was forced to accept a lower takeover offer from suitors, Asian-based Wilmar International and First Pacific.
After initially offering 65 cents a share in April this year, oils trader Wilmar and Hong Kong Investor First Pacific upped their bid to 70 cents in May, plus a 1 cent dividend. Now Goodman Fielder has agreed to a lower deal of 67.5 cents a share, plus the 1 cent dividend.
The lower price is likely the result of Goodman being forced to writedown the value of its intangibles by between $300 million to $400 million, suggesting Wilmar and First Pacific may have found more potential issues during due diligence.
Shareholders in Goodman Fielder may well be disappointed, with many likely to have picked up shares at $2.00 when the company went public in 2005. But intense competition from imported products, the rise of private label products and pressure from the supermarket operators to lower their margins has crushed Goodman Fielder's profits, revenues and placed it in the unwanted position it finds itself in.
Other supermarket suppliers like Coca-Cola Amatil Ltd (ASX: CCL), Patties Foods Limited (ASX: PFL) and Treasury Wine Estates Ltd (ASX: TWE) have also been feeling the pain, and investors may want to watch Asaleo Care Ltd (ASX: AHY), which supplies 69% of its product to the major retailers.
It may be a blessing in disguise for shareholders, with Goodman Fielder likely to continue struggling for some years, had it not agreed to the latest offer. Investors will likely be glad to wash their hands of the serial underperformer anyway – as long as the company doesn't trip itself up before the takeover is formally completed. Once they have, shareholders might want to have a read of the following report…
