Golden Circle's plan for Cedenco turns sour

Brierley Investments may have missed the chance to realise on its stake in a leading NZ food company, DITA DE BONI reports.

Australia's largest fruit and vegetable manufacturer has stepped away from a deal to buy 54 per cent of Gisborne-based Cedenco Foods.

The transtasman deal, which would have seen Brisbane-based fruit and vegetable processor Golden Circle acquire a controlling interest in the food ingredient manufacturer, dissolved late last week.

It would have also enabled Brierley Investments - which owned the majority of the stake being negotiated - to quit another asset from its shrinking portfolio.

None of the parties contacted by the Business Herald yesterday were willing to specify why the deal had broken down.

Golden Circle - an unlisted public company with annual sales of around $252 million - filed notice to purchase the holding in early June, saying the acquisition would broaden its product range.

The move would also give it access to a frozen product plant Cedenco is building in New Zealand.

Golden Circle was offering between $11.8 million and $14.1 million for the stake, valuing the shares at between 138c and 165c each. They closed 5c lower to 100c yesterday.

Brierley Investments is trying to sell its 48.5 per cent holding. A further unnamed party, also looking to sell out of the company, holds most of the balance.

Cedenco had applied for Stock Exchange approval to disclose information to Golden Circle that had not been available to the market as part of due diligence. It said yesterday it had not got to the stage of supplying that information.

Cedenco chairman Basil Logan said the company would now be consulting with Brierley to see what its intentions were, but it was "committed to resolving the issue in the interest of all shareholders.

"[Cedenco] is running profitably and we know it will continue to be attractive to investors - particularly those that understand the food industry."

Brierley chief executive Arun Amarsi said the company was still looking to sell its shares in Cedenco.

He said Golden Circle had not walked away from the deal in acrimony, without being more specific.

Cedenco's joint operating venture with Australia's Cerebos meant that any transfer of ownership would need some "careful working through," he said.

There were several parties "both international and [national]" that were still interested in purchasing Brierley's stake.

Golden Circle would not return calls from the Herald last night.

After the early June announcement that it would seek to acquire the 54 per cent shareholding, Golden Circle has built up an 0.7 per cent share in Cedenco. It continues to be supplied with tomato paste by Cedenco for a range of products.

Cedenco is forecasting a pre-tax surplus of $3 million in the year to September.

It is expecting there will be growth in the sales of its fruit and vegetable powders, purees and pastes.

The company says its new $4 million Gisborne factory to supply food giant Heinz is still expected to be completed by the end of this year.