The transaction is expected to be completed in February 2013, subject to the satisfaction of conditions.
Goodman Fielder Chief Executive Officer Chris Delaney said the transaction was consistent with the company’s strategy to optimize its portfolio by focusing on its core categories.
“This transaction is another example of the successful execution of our strategy to divest non-core businesses to enable us to focus our capital and marketing expenditure and our internal resources on our core categories and brands. Together with the sale, we have also structured a long-term supply partnership with Nisshin to ensure Goodman Fielder maintains an efficient supply of flour and related products for our business in New Zealand,” Delaney said. “With global scale and expertise in milling, Nisshin brings considerable scope to provide further efficiency and innovation to create value under this long-term supply agreement.”
Goodman Fielder will retain the business where it sells flour to retailers, in-store bakeries and hot bread shops, supported by the flour supply agreement with Nisshin. Nisshin will be responsible for supplying to commercial and industrial customers in New Zealand.
Nisshin has indicated its intention to retain all existing staff and will shortly offer new contracts.
Nisshin is the largest flour miller in Japan with a market share of approximately 40% and milling capacity of greater than 8,000 tonnes per day. It has revenues of ¥170 billion (NZ$2.5 billion).
Delaney said net proceeds of the sale will be used primarily to repay debt and further strengthen Goodman Fielder’s balance sheet.
“I am pleased with the significant progress we have made in strengthening our balance sheet as part of our strategic plan. This transaction builds on our other recent initiatives to ensure our group financial position is sufficiently strong and flexible to enable us to pursue our strategic agenda,” he said.