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Burns Philp begins Goodman mop-up
SYDNEY, Australia (Reuters) -- Australian spice maker Burns Philp and Co Ltd began mopping up the rest of takeover target Goodman Fielder Ltd on Friday after sealing a late-night deal to secure its purchase of the nation's biggest food group. "It's all over, bar the shouting," said Deutsche Bank retail analyst Ray Gin, as Burns Philp took its acceptances for its offer to at least 74 percent, including stakes from two big investment funds. Burns Philp, which covets Goodman's icon food brands, agreed to pay an extra two cents a share late on Thursday, raising its total offer to A$1.95 billion ($1.2 billion) from A$1.93 billion. The sweetened offer secured board control and a recommendation of the bid from the existing Goodman board, a critical issue for Burns Philp as it woos small investors who own about 20 percent of the takeover target. Fund manager Maple-Brown Abbott, a key shareholder, told the Australian Stock Exchange on Friday it had sold its 11 percent of Goodman into the revised bid, while fund manager Perpetual Trustees was also selling its eight percent stake. Goodman, which owns Uncle Tobys breads and cereals, Meadow Lea margarine and White Wings cake mix, now fetches A$1.635 a share from Burns Philp, which Goodman said will have majority representation on its board from next week. "It's certainly had the desired effect," Deutsche's Gin said of the new, higher price. The acceptances lift Burns Philp's stake to at least 74 percent, but it needs 90 percent or more to trigger compulsory acquisition and access Goodman's cash flows. The bid has lifted Burns Philp's net debt to A$2.7 billion. Standard & Poor's cut Goodman's long-term corporate credit rating on Friday and the rating on its debt issues to 'B+' from 'BBB+', keeping the rating on CreditWatch with negative implications. It said the rating tracks that of Burns Philp. Investors lifted Burns Philp's share three percent to 51 cents on Friday, while Goodman shares rose 1.2 percent to A$1.63 with nearly 20 million shares traded. The takeover marks the latest step in Australia's food industry consolidation since soup giant Campbell Soup Co bought Arnotts Biscuits in 1997 and Snack Foods last year. It also doubles Burns Philp's assets to A$4.5 billion and expands the food empire of Deputy Chairman Graeme Hart, New Zealand's richest man, from spice brands in North and South America to icon food brands in Australia and New Zealand. Analysts give high marks to Hart, who rescued the yeast maker when it was on the brink of collapse three years ago, ironically because of a failed expansion plan, and restored it to profit. However, bankers are critical of the 1980s-style debt levels. Burns Philp has said it will keep Goodman whole, but bankers say it will likely sell its blue-ribbon Uncle Tobys bread and cereals brand, and private equity firms are eyeing baking. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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