Burns Philp hopes to raise $2.4b from float

MELBOURNE - Australia's Burns, Philp & Co said the Goodman Fielder business unit it plans to float on the Australian and New Zeland stock exchanges was expected to post a 10 per cent rise in earnings in fiscal 2006.

Graeme Hart's new food vehicle, Goodman Fielder, will be hoping to raise more than A$2.25 ($2.4 billion) when it lists on the Australian Stock Exchange, according to details released last night.

Burns Philp's baking, spreads and oil business would be sold into the new vehicle for A$1.47 billion along with Mr Hart's privately owned Rank Group's dairy operations for A$782.6 million.

Mr Hart owns 54 per cent of Burns Philp through Rank.

The Goodman Fielder business is expected to have a market capitalisation of up to A$2 billion when it lists in Australia and New Zealand later this year.

The company said in draft documents for the initial public offering that earnings before interest and tax for the new company for the year to June 30, 2006 were forecast at A$355.6 million, up from A$322.2 million in fiscal 2005.

Earnings before interest and tax EBIT in fiscal 2007 were forecast to rise to A$405.6 million.

Goodman Fielder net profit after tax was forecast at A$186.5 million in fiscal 2006, rising to A$223.9 million in fiscal 2007.

No pro-forma historical net profit figures for Goodman Fielder were provided for comparison.

Based on a market capitalisation of A$2 billion, the forecast net profit for fiscal 2006 implies a price-earnings multiple of 10.7.

The new company will hold some of Australia's best known brands including Wonder White, Mighty Soft and Helga's breads, Meadow Lea margarine, Pampas pastry and White Wings cake mixes.

Burns, Philp & Co posted a seven-fold increase in net profit to A$861.9 million in fiscal 2005, boosted by asset sales. Earnings before interest, tax, depreciation and amortisation from continuing operations in fiscal 2005 were A$414.2 million.

Burns Philp & Co said former National Foods Chief Executive Peter Margin had been appointed chief executive of Goodman Fielder. Credit Suisse First Boston is the global coordinator for IPO. Shares in Burns Philp, which will retain a stake in Goodman Fielder, closed up 0.9 per cent at A$1.13 in a wider market up 1.2 per cent.

Goodman Fielder has been valued by ABN Amro at up to A$2.78 billion - split between A$2.4 billion for the Burns Philp operations and A$384 million for the dairy operations.

Mr Hart, New Zealand's richest man, almost went broke in 1997 when he spent A$260 million in a share raid on Burns Philp only to discover massive problems in the company shortly afterwards.

By 2003 he had turned the company around to the point where it made a successful A$1.9 billion for Goodman Fielder.

A year later he sold the yeast and spice arm for A$1.9 billion, leaving only the Goodman Fielder operations.

- REUTERS