British Firm Bids $2.4 Billion for Australian Ex-Suitor

SYDNEY, Australia —  Britain’s Ranks Hovis McDougall PLC stunned the Australian stock market Monday with a bid valued at $2.4 billion for Australia and New Zealand’s largest food group, Goodman Fielder Wattie Ltd.

If anything, the market had expected the opposite--that GFW would eventually revive a hostile $2.9-billion takeover bid for Ranks Hovis that lapsed last August after being referred to the Monopolies Commission.

Ranks Hovis neatly turned the tables on its former suitor, which is also a leading flour miller, baker and food manufacturer, with a surprise market raid Monday morning.

Ranks Hovis then announced an offer of four new shares for every 11 GFW shares, or an alternative $2.11 cash per share, after buying the stock heavily on the open market. A Ranks Hovis statement said this values GFW at $2.4 billion at current rates.

Ranks Hovis said it bought 102 million shares in all--10.1% of GFW--at prices of up to $2.04, well above Friday’s closing $1.60 per share.

Ranks Hovis deputy managing director Tim Howden said the big difference between the bids was that GFW’s cash offer of $7.95 a share would have left Ranks Hovis shareholders with no future involvement in the business.

The Ranks Hovis bid would create an Anglo-Australasian food giant, probably in the world’s top 10 in its field, equally owned by shareholders in Britain, Australia and New Zealand.

“If the share offer was accepted by all Goodman Fielder Wattie shareholders . . . the result would be an almost even split of the shareholding between the U.K. and Australia and New Zealand,” Howden said at a news conference in Sydney on Monday.

“Our share offer gives the shareholders in Goodman Fielder Wattie what I think is a unique and exciting opportunity to participate fully in the ownership of a powerful international food company which will be listed on the London, Australian and New Zealand stock exchanges,” he said.

“Our core businesses are the same,” Howden said, adding that big companies more and more were having to reduce the number of businesses in which they operated but to operate on a wider international scale.

A GFW statement advised shareholders not to sell until the board had considered the bid. The offer must clear Australian and New Zealand foreign investment and anti-monopoly obstacles. Ranks Hovis advisers at the news conference were unconcerned about regulatory clearance, saying the companies do not overlap in Australia and New Zealand.