Goodman, which sells Crisco, Paul Newman's salad dressings and Wonder White breads in Australia, would fetch as much as A89c a share in a takeover by Wilmar or another buyer, according to JPMorgan Chase.
That would value Goodman at A$1.74 billion ($2.25 billion), 31 per cent higher than last week's close of A68c, data compiled by Bloomberg show.
A takeover "makes a lot of sense", said Michael Greenall, a Kuala Lumpur-based analyst at BNP Paribas.
"There's potential benefit for both companies."
Wilmar, which already owned a 2 per cent stake in Goodman, became the company's biggest shareholder when it bought the remaining 8 per cent on February 27 using UBS as an intermediary, according to regulatory filings.
A spokeswoman for Wilmar declined to comment on its plans for Goodman.
Goodman's management hasn't spoken to Wilmar's management since the increased stake was disclosed, said Goodman's Sydney-based spokesman, Ian Greenshields. "We have no offer in front of us," he said. "We welcome them to the share register."
After starting in 1991 with an oil palm plantation in Western Sumatra, Indonesia, Wilmar has become the world's largest producer of the oil used for cooking and also to make biofuel, chocolates and cosmetics.
Sales have surged sixfold to A$44.7 billion in the past five years after a 60 per cent jump in palm oil prices and a decade of acquisitions that added sugar refiners, flour mills and edible oil producers, according to data compiled by Bloomberg.
With more than 200,000ha of palm oil plantations in Malaysia and Indonesia, Wilmar said it was building an integrated agricultural products business from "origination to branding, merchandising and distribution" when it announced the purchase of the Goodman stake last month.
"If you are an upstream player and you want to go downstream, one way to do this is to go and buy a product which you then need to distribute," said BNP Paribas's Greenall.
"The other way is to buy a distributor which has the networking channels or marketing channels throughout the world to sell your products through."
With Goodman, which has products to sell in Asia as well as an established sales network in Australia, Wilmar would get both.
"You hit two birds with one stone," Greenall said.
In 2010, Wilmar held 43 per cent of the retail market for cooking oil in China, according to Euromonitor International.
The researcher forecasts sales of packaged food there to rise 51 per cent to 1.48 trillion yuan ($283 billion) in the four years through 2015.
Still, margins at Wilmar's consumer business shrank last year as China capped cooking oil prices for most of the year even as costs rose. Falling prices also hurt profits in the sugar business, which Wilmar acquired with the A$1.8 billion purchase of Australia's biggest refiner in 2010. As demand for palm oil also weakened, profits fell for two consecutive years.
"They're trying to look for other things to help to grow the business," Alvin Tai, an analyst at OSK Holdings, said by phone from Kuala Lumpur.
"Wilmar really needs a good growth angle."
Goodman, founded in 1909 in the farming town of Tamworth, competes for space on supermarket shelves for products including La Famiglia bread and White Wings flour. The company's sales and profits have fallen because of rising ingredient costs and competition with Australia's largest super-markets.
"Goodman is a turnaround story in the making," said Rohan Suppiah, an analyst at Maybank Kim Eng in Singapore.
Wilmar "can use those brands and apply them to their marketing strategies in other parts of Asia, especially in China, where they are particularly strong," he said.
Goodman, whose shares fell more than 60 per cent from the 2005 initial public offering price of A$2 through its earnings results in August, announced a strategic review last year and has said it may sell certain parts of its business.
Wilmar had been in talks to acquire the Integro speciality ingredients and the New Zealand milling businesses, Greenshields said last week.
Asia accounts for about 12 per cent of sales for Goodman, which sells brands including Meadow Lea margarine, Meadow Fresh long-life milk and Praise mayonnaise in China and Southeast Asia.
- BLOOMBERG
