Australian food major Goodman Fielder has announced that it has sold its biscuits business to Green’s Food Holdings, a move in line with its strategy over the last two years to streamline its product portfolio.
The company’s biscuits business produces a range of sweet and savoury biscuits including cookies, creamies and fancies, plain and shortbreads, chocolate and crackers. Its major brands include Paradise, Cottage, Vive and Veri Deli.
According to a filing with the Australian Stock Exchange, Goodman Fielder will also licence Green’s to use the White Wings brand for biscuits only for a fixed but undisclosed period of time.
Chris Delaney, Goodman Fielder’s chief executive, said the transaction was consistent with the company’s strategy to focus on its core categories and represented the best outcome for staff currently working in the biscuits business.
“The biscuits business is not core to our grocery division and we formed the view that this business can maximise its potential under different ownership,” Delaney said in the filing.
“For Goodman Fielder it allows us to concentrate our internal resources and investment on our core brands within the grocery division where we have profitable category leadership positions including spreads, flour and cake mix and dressings and mayonnaise,” Delaney added.
According to the filing, the transaction is expected to be completed by the end of February 2014 and will generate net proceeds of A$17m, which will be used to reduce net debt and further strengthen Goodman Fielder’s financial position.
Just the latest
As a result of the divestment, Goodman Fielder expects to record a non-cash impairment charge after tax against the biscuits business in the range of A$50-55m, which will be recorded as a significant item in the company’s FY14 results.
The deal comes a year after the company offloaded its New Zealand flour milling business to Japanese firm Nisshin Flour Milling for NZ$51m, and also closed the doors on more than 10 factories in its baking division.
It was in 2012 whenGoodman Fielder first announced an overhaul of its bakery business under the “Project Renaissance” initiative in a bid to reduce costs by A$100m by 2015 to improve efficiency in a period of struggling sales.