Foodland says others keen

MELBOURNE - Australian-based grocer, Foodland Associated, fighting a takeover bid from Metcash Trading, said it had received indicative proposals from parties that could make a rival offer for all or part of the company.

Foodland has rejected an A$846 million ($906 million) offer for its Australian business by grocery wholesaler Metcash, which plans to acquire the whole company and then spin off the New Zealand operations. Metcash would then be left with Foodland's Australian operations.

Foodland has instead unveiled its own plan to split the company and list its New Zealand business, which provides about two-thirds of its earnings, and has also opened a data room to encourage rival offers.

"We have a data room established and we have people doing due diligence," chief executive Trevor Coates told reporters at a briefing on its first-half results.

He said he could not provide more detail about the number of interested parties or the extent of their proposals.

Australia's largest grocer, Woolworths, has said it would look at Foodland, while its main rival, Coles Myer, has declined to comment.

Foodland said profit before one-off items for the six months to January 30 was A$54.9 million, in line with analyst forecasts and up from A$52 million a year ago.

Profit after one-off items was A$53.2 million, down from A$77.8 million a year ago, when asset sales boosted the result.

"The overall result for the year we believe will be in line with recent forecasts," Coates said.

Foodland has forecast 2005 earnings before interest, tax and amortisation (ebita) from continuing operations of A$250.1 million, flat on a year ago. Coates said the company was moving ahead with its plans to split the business, and the process could be completed by August.

Foodland's major supermarket brands in New Zealand are Woolworths and Foodtown. In Australia it owns Action supermarkets and supplies the franchise Dewsons and Supa Valu stores.

Metcash has offered A$7.18 cash per share or 2.44 Metcash A preference shares, to reflect the value of the Australian business, plus one share in the New Zealand spin-off company. Shareholders would also keep the A$0.43 a share first-half dividend.

Metcash also said on Wednesday that shareholder meetings had supported a restructure that effectively removed South African company Metoz Holdings as its majority shareholder.

Foodland shares closed 1.1 per cent higher at A$25.06 in a sharply weaker overall market, and Metcash added 1.7 per cent to A$3.

- REUTERS