RHM offer ‘inadequate’

Press, 27 April 1989, Page 42

RHM offer ‘inadequate’

Goodman Fielder Wattie said it rejects the sAust3.l billion bid by United Kingdom food giant Ranks Hovis McDougall Pic as “totally inadequate.” The chairman, ’ Mr Pat Goodman, told a news conference that directors found the bid was unacceptable because the price did not reflect the underlying value of the company. Goodman said the offer was highly conditional and created “enormous uncertainty” among GFW shareholders. “The proposed offer price and related terms are totally unacceptable, given the underlying strength of Goodman’s businesses,” he said, adding that a successful offer would result in the loss of Australasian control over a vital part of the local food industry. “RHM have failed to clarify their intentions in many areas, including asset sales and the future

employment of GFW’s 20,000 employees,” Goodman said. RHM, which . yesterday boosted its stake in its target to 14.9 per cent, has offered four new shares for every 11 GFW shares and a cash alternative of £1.236. Goodman said because the cash offer was denominated in pounds sterling, it left GFW shareholders in Australia and New Zealand exposed to exchange rate fluctuations. He said that at current exchange rates, the proposed cash offer' is equivalent to sAust2.64 a share and the scrip offer was worth the same, based on the underwritten value of RHM shares of £3.40 each. Goodman noted the vigour of RHM’s defence of GFW’s bid last year, “It was pleasing to see that RHM had finally recognised the merits of combining the two businesses,” Goodman said. He said directors would send a letter of advice to shareholders after the company received RHM’s Part A statement. In the meantime, they repeated their advice not to sell their shares.