January 20, 2009
Italian food group to purchase Goodman Fielder milk unit
Italy's largest food group, Parmalat SpA, is looking to purchase Goodman Fielder Ltd's milk unit in a deal that may cost A$500 million (US$331.4 million).
Parmalat tried to acquire Australia's Dairy Farmers in last August, but lost out to Japan's Kirin Holdings Co Ltd. Since the company missed out on dairy opportunities in Australia, they are looking at New Zealand, said the analyst.
Goodman's dairy unit is a leading supplier of consumer dairy products in New Zealand, but the business has been performing badly and it is perhaps in Goodman's best interests to be rid of it, according to an analyst at UBS, adding that the deal with depend on the price.
Analysts said Goodman would be seeking in excess of A$500 million for the dairy unit.
Goodman Fielder bought the dairy business in December 2005 for A$830 million but the earnings have since halved and it has taken a A$170 million write down.
However, Parmalat faces tight competition due to similar interests from Japan's Kirin, France's Danone, Singapore's Olam and Canada's Saputo Inc.
The business was worth A$350-500 million, based on seven to 10 times forecast fiscal 2009 earnings of A$50 million before EBITDA, according to Citigroup Global Markets analyst Andy Bowley.
US$1 = A$1.5107 (Jan 20)
