Metcash increases Foodland offer

SYDNEY - Grocery wholesaler Metcash Ltd today increased its offer for Foodland Associated Ltd to the equivalent total value per Foodland share of A$25.07 ($27.09) to A$27.18.

Metcash said the offer represented a significant premium of between 31 per cent and 41 per cent to Foodland's closing price on the day prior to the announcement of Metcash's bid on December 6 2004 of A$19.21.

The increase in the offer is in cash and scrip and the value of Foodland Australia shares under the cash alternative is A$8.91 and under the Metcash A share alternative A$9.41.

The equivalent value of Metcash's revised offer per Foodland share includes amounts that may be paid by Metcash to Foodland New Zealand relating to a contingent tax receivable of 21 cents and excess cash, 15 cents, which have been based on information contained in Foodland's target's statement, Metcash said.

It is based on the value attributed to Foodland New Zealand by Foodland's independent expert, Grant Samuel, of A$16.16 to A$17.77 per Foodland share.

"Metcash's revised offer of A$8.91 to A$9.41 equivalent value per Foodland share is now firmly within the valuation range for Foodland Australia of A$8.70 to A$9.56 per Foodland share derived by Foodland's independent expert Grant Samuel," Metcash said.

Metcash said that once it completes the offer it will use all reasonable endeavours to recover the tax receivable and will pay the net proceeds realised to the separately listed Foodland New Zealand.

"Metcash's revised offer and the adjustments made to the NZ Holdco transfer process now mean that its offer is more certain, cost-effective (for Foodland shareholders) and timely than the demerger proposal proposed by Foodland," Metcash said.

Foodland has previously rejected the takeover offer from Metcash, saying it could get better value for shareholders by spinning off its New Zealand business.

Metcash shares were up six cents at A$3.34 at 2.40pm NZT while Foodland shares were up 12 cents at A$25.06.

- AAP