GrainCorp-Cargill JV to purchase Goodman Fielder milling business
September 01, 2002
by Emily Wilson
SYDNEY, AUSTRALIA — Goodman Fielder has agreed to sell its Australian flour milling and mixing business to joint venture partners GrainCorp Ltd. and Cargill Australia Ltd. for approximately A$200 million (US$108.9 million).
The deal is expected to be completed by early October, said Goodman Fielder Chief Executive Officer Tom Park.
A key element of the transaction is a long-term contract for the supply of flour-based products to Goodman Fielder, Park said. The sale of the Australian flour mills was consistent with the company’s strategy to focus more on its retail branded businesses, he said.
"GrainCorp has extensive capability in grain procurement, storage and handling. Cargill is one of the largest flour millers in the world. Together the joint venture will provide Goodman Fielder with on-going security and quality of supply on competitive terms," said Park.
Cargill, a U.S.-based company, has operated in Australia since 1968 and had established a strong commercial relationship with Goodman Fielder. Tom Keane, GrainCorp managing director, noted that GrainCorp and Cargill already were working together through two jointly operated receival centers in New South Wales.
Goodman Fielder’s move to sell its milling assets has stirred controversy after Manildra Group, Goodman Fielder’s principal competitor in flour milling, was excluded from the bidding process that included AWB Ltd. and the GrainCorp-Cargill venture.
Dick Honan, Manildra’s chairman, had said the company would oppose the sale to either of the two entities through the Australian Competition and Consumer Commission. He later warned that if the ACCC did not block the bid they, as an industry, would seek to have the takeover blocked in the federal court.
However, ACCC Chairman Allan Fels has announced that the acquisition will not be blocked.
"The ACCC did not believe that the proposed acquisition would substantially lessen competition in the markets for flour milling and mixing in New South Wales and south eastern Australia," Fels said. For more on this story, visit www.World-Grain.com.