Goodman sells volatile holding

By DITA DE BONI

Australasian food group Goodman Fielder has sold part of its volatile ingredients division to a Washington-based carbohydrate supplier, further refining its "core business" focus.

Starch Australasia - with 300 employees across Australia and New Zealand - is being bought by specialty starch-maker Penford Corporation for $A100 million ($132 million).

Goodman Fielder chief executive David Hearn said yesterday that the sale was a "genuine win-win outcome that provides a good return to ... shareholders at a price substantially above book value."

Starch Australasia's sales totalled $A100 million in the last financial year.

The operation has production sites at Lane Cove and Tamworth in NSW, as well as an Auckland site.

Goodman Fielder will receive royalty payments from future global sales of one of the business' star products, Hi-maize, a corn-based food starch product that is used in white bread and McDonald's buns in Australia to add fibre without changing the food's taste or texture

It will retain exclusive rights to Hi-maize in bread products throughout Australasia.

Penford will gain further geographical spread in the Asia-Pacific rim, and increased diversification of its paper and textile starch-focused operation.

Goodman Fielder has made a commitment to divesting underperforming businesses in the past few years, selling its Steggles chicken operation a year ago to focus on high-earners such as milling and baking, edible oils, food service, cereals and snacks.

Although Hi-maize had been pegged as providing growth for its ingredients division through sales in Asia and Europe, analysts have consistently questioned whether the company should sell off the division because of variable past results.

The division's pre-tax earnings dropped 23 per cent in the 1999-2000 half-year due to a tight gelatin market, settling at $A34.8 million in the full year.