Goodman Fielder to sell Champion Milling to Nisshin

Australasian food company Goodman Fielder has agreed to sell Champion Milling in New Zealand to Nisshin Flour Milling, a leading flour miller in Japan, for NZ$51m ($42.43m).

The deal is part of the company’s plan to streamline its portfolio and strengthen its financial position.

Champion Milling has flour mills in Mount Maunganui and Christchurch, and employs 130 people.

In addition to the deal, Goodman Fielder has also entered into a long-term supply agreement, under which Nisshin will supply flour and related products to Goodman Fielder New Zealand.

Supported by this supply agreement, Goodman Fielder will continue to sell flour to retailers and in-store bakeries, while Nisshin will cater to commercial and industrial customers in New Zealand.

Goodman Fielder chief executive officer Chris Delaney said that the transaction is in line with the company’s plan to divest non-core divisions in order to focus its capital and marketing expenditure and internal resources on core categories and brands.

"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," Delaney added.

Nisshin Flour Milling plans to retain all existing employees and offer new contracts.

The transaction is likely to be completed in February 2013, and the proceeds of the sale will be used by Goodman Fielder to repay debt.

Nisshin, which is listed on the Tokyo Stock Exchange, has market share of nearly 40% in Japan, a capacity of more than 8,000t per day, and revenues of JPY170bn ($2.06bn).

For the 12 months to June 2012, Goodman Fielder reported a net loss of A$146.9m ($154m), an improvement on a loss of A$166.7m ($174.79m) in 2011.

In August 2012, the company agreed to sell its Integro oils business to GrainCorp for A$170m ($178.25m), following which it announced its plans to sell or shut down around 15 factories across Australia and New Zealand over the next three years, as part of its efforts to generate A$100m ($104.85m) in savings.