Ernest Adams cries foul on Goodman Fielder bid

By Geoff Senescall

Ernest Adams' chairman Michael O'Neill is threatening legal action to block Goodman Fielder's takeover offer which is on the point of being accepted by nearly 80 per cent of shareholders.

In a statement released last night Mr O'Neill accused Goodman Fielder of "abusing a written agreement" by proceeding with a takeover bid without first coming to the board with its proposal.

He said that legal action was an option being considered.

Goodman Fielder launched its bid last week, offering 230c a share, valuing the Christchurch-based baker at $38 million. In doing so the Australasian food group bought a 19.9 per cent stake from 47 per cent shareholder Gourmet Direct, which is jointly owned by Tower Corporation and businessman Errol Clark.

Mr O'Neill, who only resigned as a director of Gourmet Direct last week, said Goodman's move to buy the holding was to try to prevent a competitive process developing.

"During the last week I have been contacted by other parties. These parties have said they are interested but won't act while Goodman has control of 20 per cent of the shares."

However, shareholders have been clearly frustrated about the slack performance of Ernest Adams over the years. The company had promised much but delivered little, said one shareholder who declined to be named.

The certainty of the Goodman deal was attractive, he said. Ernest Adams is understood to have attracted a number of suitors but none have stuck. Certainly, Goodman was the only party doing due diligence. Goodman is understood to be bemused by the tactics of the Ernest Adams board. But a spokesman for the Sydney-based company, Robert Hadler, declined to comment on commercial and confidential negotiations.

The Business Herald spoke to Ernest Adams shareholders controlling 78 per cent of the company's shares. Outside Gourmet Direct - which is being advised by Wellington merchant banker Cameron and Co - the main shareholders are Tower (with a further 11 per cent) Spicers (around 8 per cent) and BT Funds Management (around 12 per cent).

Each said that 230c a share was a fair offer. In the absence of a higher bid they would accept the one from Goodman. Mr O'Neill said that his concern had nothing to do with price. "We are not intending to make any comment or give any indication of our attitude to the actual level of the bid. We will consider that when the independent appraisal is done.

"But what we are just concerned about is the process. We believed that we would be able to receive a proposal from Goodman's and that we would then be able to see if there were any other proposals around which achieve the same thing or a better outcome and that shareholders would have the ability to make a decision on any proposal ..." Mr O'Neill is calling for all parties with other proposals to come forward.

"Ernest Adams has been in business for 70 years and we don't intend to let down our shareholders by being bullied, which may result in an outcome which is contrary to the interests of shareholders."