GFW bid ends ‘phoney war’

Press, 22 July 1988, Page 15

GFW bid ends ‘phoney war’

By

TONY VERDON, in London

Goodman Fielder Wattle's long-awaited bid for British food conglomerate, Ranks Hovis McDougall, promises to be a long, bloody battle, according to financial commentators in London.

Although some financial observers were dismissing the Australasian group’s bid as a “non-starter," others said the odd thing about the bid was “how feasible it sounds." GFW launched its SNZ4.4 billion bid after a "phoney war” which lasted almost two years. GFW’s chairman, Mr Pat Goodman, set the price of the bid at 465 p a share, even though RHM's shares climbed to 647 p on the London Stock Exchange after the announcement.

Goodman holds more than 29 per cent of RHM. The bld brought a swift, hostile response from RHM's managing director, Mr Stanley Metcalfe, who has twice rejected Goodman Fielder’s requests for a seat on his board. “This makes no sense financially or industrially,” he said. “It is an attempt by Goodman Fielder to escape from their own territory where they have a weak currency, socialist governments, and only 24M people." The borrowings arranged by Goodman Fielder would leave the group financially stretched. “Gearing would rise to perhaps 350 per cent of assets, and they would have either to cut back on investment or marketing spending to maintain our brands.”