Goodman Fielder (GFF) has agreed to a takeover bid from persistent suitors First Pacific and Wilmar which values the butter and margarine maker at 2.5c less per share than their most recent offer.
First Pacific and Wilmar will pay 67.5c per Goodman Fielder share, which will allow the target to pay a 1c final dividend. This represents a 3.6% discount on the previous offer of 70c, or a 2.1% discount including dividend.
Calculations by Business Spectator estimate the value of the deal at $1.32 billion, excluding the dividend, or $1.34 billion, including the dividend. However, the First Pacific-Wilmar consortium already owns 19.9% of Goodman Fielder's share registry.
The agreement comes as Goodman Fielder also announced it expects to record a full-year non-cash impairment charge of between $300 million and $400m.
The group said the impairment charge was the result of challenging trading conditions and outlook in its core Australian and New Zealand baking and grocery businesses, and will predominantly be recorded against those businesses in the group's full-year results.
In April, Goodman Fielder warned that difficult trading conditions were likely to impact its full-year result and that manufacturing and supply chain cost savings had been delayed.
The group said it expected normalised earnings before interest and taxation (EBIT) for fiscal 2014 to be between 10% and 15% below analysts’ consensus of approximately $180 million.
Goodman Fielder board recommends offer
The Goodman Fielder board has unanimously recommended the reduced proposal in the absence of a superior offer.
Goodman Fielder chairman Steve Gregg said in reaching a decision to unanimously recommend that shareholders vote in favour of the revised offer scheme, the board concluded that the proposal represented an attractive value outcome for shareholders.
"I believe it also represents a positive outcome for our employees, our customers and our consumers," he said.
It provides an opportunity to further leverage our strong consumer food brands in Australia and New Zealand to grow our business across the Asian region."
The deal will require shareholder approval and an independent expert will be appointed to determine if the proposed deal is fair and reasonable. Regulatory approval is also required from the Foreign Investment Review Board and the Overseas Investment Office in New Zealand.
Goodman Fielder shares have been in a trading halt since Monday ahead of this announcement and last traded at 68c.
In February, Goodman Fielder forecast normalised annual earnings to be "broadly in line" with the previous year's $185.6m as soaring milk prices and intense competition in baking goods eroded profitability.
The maker of household brands including Vogel's bread, Meadowfresh milk and yoghurt, and Meadowlea butter and margarine has been cost cutting, restructuring and divesting over the past three years, to focus on its core brands and reduce debt.