Goodman Fielder takeover offer lowered

GFF is one stock that’s made headlines today after announcing a write-down which resulted in the Wilmar and First Pacific bid being cut.

Source: Bloomberg

The background of the story was that Wilmar and First Pacific had bid 70 cents a share for GFF. The company accepted this offer, resulting in the due diligence process commencing in May. During the time, GFF shares never actually traded at 70 cents, suggesting investors were never patient enough to wait for the deal to go through, nor for a better offer.

GFF will write-down around $300-$400 million which is worth around 25% of its net assets. This is not too big of a surprise given the significant challenges the business has been facing over the past few years. This resulted in the suitors lowering their bid to 67.5 cents a share, effectively a 3.6% discount to the initial offer. GFF will also pay a one cent dividend after being given permission by its suitors. Predictably the stock dropped below the offer price today, with investors rushing to get out of the stock as it returned from a trading halt.

From an investment perspective, there is just no real upside in holding on to the stock, which probably explains why the stock dropped 3% today. However, around 65 cents is probably where it’ll find support as it gives some value to scalpers.

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