“By this time it is expected that GrainCorp will have completed its acquisition of Gardner Smith,” the company said in a statement, pointing to the Canadian company’s recent acquisition of Australia's second largest oilseed crusher, which is valued at AU$302m.
The Goodman sale however does not include the out-of-home business in Australia, or the company’s Asia Pacific fats and oils business.
According to the statement, Goodman Fielder expects to book an estimated profit on the sale of AU$25m before tax. Net proceeds of the sale of approximately AU$165m will be used primarily to reduce debt and further strengthen it’s balance sheet.
Cost cutting and more
Chris Delaney, CEO at Goodman Fielder, said that the transaction was consistent with the company’s new strategy to optimise its current portfolio by focusing on its core categories.
“We are pleased with the outcome of this transaction. As we first indicated to the market in November 2011, Integro is a well-performing business; however, given our focus on retail branded categories, it is not core to Goodman Fielder,”he said.
“This divestment enables us to concentrate our investment and internal resources on our core categories and brands,” said Delaney.
The sale was part of AU100m cost cutting plan initiated last year, where a loss of AU$166.7m was reported, in which the company had indentified AU$25m in savings that were to be realized in 2013, and the rest over 2014and 2015.
This is the second time the company put Integro, the commercial vegetables oils business under the microscope. The business, which supplies oils to commercial kitchens and manufacturers, was set to be sold to Cargill for NZ$240m in 2010.
However, the Australian Consumer and Competition Commission (ACCC) blocked the sale then, stating that the sale would have lead to a significant concentration of refining assets in Australia.
Cargill was said to be in talks again when Integro was put back on the chopping board, but terms could not be finalised.
GrainCorp to merge Goodman and Gardner Smith
Delaney revealed that the company has also structured a long-term supply partnership with GrainCorp to ensure Goodman Fielder maintains an efficient supply of oil and finished goods to Goodman Fielder.
“We have a strong existing relationship with Gardner Smith and GrainCorp, who together offer a secure, vertically integrated partner for the ongoing supply of edible fats and oils to our business,” he added.
Alison Watkins, CEO at GrainCorp, said the chance to combine Gardner Smith and Integro into a larger business was a clear and logical fit with GrainCorp's strategic focus on three grains: wheat, barley and canola.
“GrainCorp Oils will provide us with immediate scale in the edible oils sector in Australia and New Zealand,” she said.
“While both are very good businesses in their own right, it is the combination of the two into a cohesive whole that allows us to unlock additional value for GrainCorp's shareholders, connects the grain growers who use our network more closely with edible oils customers, and creates a seamless and compelling offer for those customers,” she added.
According to a statement, GrainCorp expects to reap about AU$4m in annual savings as a result of the acquisitions, as well be able to crush more than 300,000 tonnes of oilseeds annually and have 280,000 tonnes of annual refining and packaging capacity.
