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Goodman questions takeover moves
SYDNEY, Australia (CNN) -- Australasia's largest food group, Goodman Fielder has asked Burns Philp to clarify some of the conditions of its takeover offer. Burns Philp launched an aggressive hostile bid for larger Goodman Fielder on December 13, snapping up 15 percent of the company at A$1.85 a share. It offered to buy the rest of Goodman Fielder at the same price, a 24 percent premium to Goodman Fielder's close the previous day. (Full story) The move, if successful, would double Burns Philp's assets, to A$4.5 billion, and expand its food products to bread, cereals, margarine and the like. But it would also leave it with a high debt load of some A$2.7 billion. Conditions may break the rulesGoodman said Tuesday some of Burns Philp's conditions were unprecedented in Australia or breached its Corporations Act. In particular, the company noted that Burns Philp requires financing to back its acquisition, a type of bid that hasn't happened in Australia in recent years and that isn't permitted under the act. Goodman's directors also objected to a clause requiring them to confirm historical and forecast earnings. Goodman Fielder has published its accounts to meet legal standards and the requirements of the Australian Stock Exchange, Chairman Keith Barton noted in a statement, and subject to an independent audit by Ernst & Young. "Given these circumstances, we believe Burns Philp should rely on our audited accounts and ASX disclosures rather than seek to transfer the financial risk of a hostile bid to the target company Directors," Barton said. Advising shareholders to waitGoodman advised its shareholders to delay making a decision on whether to accept the bid until the board gives its verdict on the bid. "In light of these legal concerns, your Board is seeking urgent clarification of these issues," the statement said. Goodman Fielder warned its shareholders last month that net profit would be near the low end of analyst forecasts, with drought hitting Australian wheat prices. (Drought ravages wheat crop) Goodman shares closed flat at A$1.80 on Tuesday, in line with the broader market, while stock in Burns Philp rose 1.92 percent to A$0.53. (Asian roundup) Australia's stock market is closed Wednesday and Thursday for the Christmas and Boxing Day holidays and reopens on Friday.
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