Goodman Fielder refloat could leave Hart $5b to spend

Graeme Hart

Food company Burns Philp may have a pot of up to A$4.5 billion ($5 billion) for future acquisitions after it refloats Goodman Fielder on the stock exchange and pays off outstanding debts, the Sydney Morning Herald reports.

Burns Philp is expected to maintain a 20 to 30 per cent stake in Goodman Fielder, which will be listed on both the Australian and New Zealand exchanges, and is expected to be valued at up to A$2.7 billion, making it an ASX top 100 stock.

Part of it will comprise New Zealand Dairy Foods which Graeme Hart is selling from his private company in a deal which will see Rank Group pocket about $550 million directly.

Since the announcement last Thursday of the planned float, Burns Philp's shares in Australia have gained 5 per cent to a seven-year high of A$1.135 on Monday, before dropping A2.5c to finish trading yesterday at A$1.11.

"The transactions effectively give Burns Philp up to A$4.5 billion of acquisitive firepower," said David Cooke, an analyst at ABN Amro, told the Sydney paper.

Goodman Fielder disappeared from the stock exchange after New Zealand billionaire Graeme Hart's Burns Philp bought it for A$2.25 billion in 2002.

Mr Hart owns about 57 per cent of Burns Philp and is believed to need extra cash to fund his recent purchase of a controlling stake in New Zealand's biggest timber company, Carter Holt Harvey, for $1.7 billion.

Goodman has been valued by ABN Amro at up to A$2.78 billion -- split between A$2.4 billion for the Burns Philp's business units and A$384 million for Dairy Foods.

Asset manager and merchant banker ABN Amro has placed a target price of A$1.30 on Burns Philp shares but suggests the potential value could rise as high as A$1.50 per share.

Burns Philp chief executive Tom Degnan has admitted the possibility of a buying spree in Australia, New Zealand and America with the money raised.

Burns Philp said the A$1.08 billion needed to buy back its outstanding high-yield US notes would be funded by a mixture of cash and new debt.

The Goodman Fielder prospectus is expected to be issued early next month.

The sharemarket listing is due before Christmas.

- NZPA