Goodman Fielder bids for baker

By Dita De Boni

Australasian food group Goodman Fielder is making a $38 million bid for Christchurch-based baker Ernest Adams.

Goodman wants to purchase all 16.5 million Ernest Adams shares at 230c each.

The acquisition will proceed in early August if holders of at least 90 per cent of the outstanding Ernest Adams shares agree.

Goodman's milling and baking general manager Colin Wise told the Business Herald that it would continue to use the Ernest Adams brand in New Zealand if the proposal were successful.

"The name has a heritage here," he said.

"A combination of their name and skill-set and our distribution will rectify what's been lacking with Ernest Adams until now. It's a win-win situation."

Ernest Adams has failed to report seven-figure profits since a major restructuring in 1995.

Mr Wise said it was much too soon to say whether Goodman Fielder would be rationalising Ernest Adams' operations.

"I haven't even been inside one of their plants," he said.

Mr Wise said the baker's shareholders had yet to approve what he described as the "compelling" offer, but said 47 per cent shareholder Gourmet Direct Investments had decided to support the offer and he hoped the other shareholders would follow suit.

One of the three Gourmet Direct directors, Michael O'Neill, is also chairman of Ernest Adams.

Mr O'Neill was in Australia and unavailable for comment, but an Ernest Adams spokesperson told Reuters that the company would commission an independent report on the bid within 13 days.

Ernest Adams was trading at 225c yesterday, up 21.6 per cent.