Burns Philp

New Zealand billionaire Graeme Hart has sold his shareholding in Goodman Fielder, the Australasian food giant he floated in 2005. The company said late last night that the near-20 per cent stake of New Zealand's richest man had fetched about A$562 million ($675.8 million).

Analysts said the sale would free up Hart to pursue acquisitions in the packaging sector, where he has been building assets, but was unlikely to put Goodman Fielder into play as a takeover target in the near future.

The sale of 265 million shares by Hart's Burns, Philp and Co through a subsidiary, BPC Finance (NZ), was made via a bookbuilding underwritten by Credit Suisse, Goodman Fielder said.  The company, whose brands include Mighty Soft, Meadow Fresh, ETA and Meadow Lea margarine, had its Australian shares placed on trading halt late on Thursday pending an announcement. Trading was also halted in New Zealand yesterday with a closing price of $2.70 a share.

CommSec analyst Grant Saligari noted that Goodman Fielder and other food and beverage firms faced tough conditions as Australia's worsening drought has pushed up wheat, dairy and oilseed prices. Goodman Fielder's shares last traded in Australia at A$2.23. They are little changed from the start of the year, but rose as high as A$2.80 in April. The broader market is up 18.5 per cent this year.

The Australian Financial Review said institutions had been asked to bid for Hart's stake at between A$2.12 a share and Thursday's close. Goodman's 2006/07 financial year net profit fell 38 per cent to A$239.8 million. It made a number of small acquisitions in the past year, including River Mill Bakeries in New Zealand.

Hart's sell-out of Goodman Fielder is the latest in a line of major deals by the one-time tow-truck driver. He bought and de-listed forest products giant Carter Holt Harvey last year for $3.3 billion and has since put its building supplies business up for sale, including 18 sawmill and manufacturing plants in NZ and Australia. The building supplies business sale is expected to fetch more than $2.3 billion. Macquarie Equities investment director Arthur Lim said the sale of assets did not necessarily mean Hart had another acquisition lined up.

However, he did have a track record of surprising the market. Hart has sold most of Carter Holt's forests for up to $2 billion, and the head office, various retail depots and packaging plants for more than $300 million. A successful sale of the timber products business would see Hart more than recover his outlay, with the strategic retention the firm's packaging division.

This year, Hart paid US$338 million for North Carolina-based Blue Ridge Paper Products and is merging it with Evergreen Packaging in Arkansas. Meanwhile, he has also completed a $3.2 billion acquisition of Swiss packaging group SIG.

Hart may be building a paper packaging empire but Lim would not be surprised to see him make an acquisition in another direction. "How about SkyCity? It wouldn't surprise me. It's a company that's been mismanaged. It's got core assets and it's got assets scattered about Australia and New Zealand that lends itself potentially to being sold." Hart's sell down would not trouble Goodman Fielder, Lim said. "Goodman Fielder has been its own company for quite a while now."

Selling out

• Graeme Hart has sold his Goodman Fielder holding.
• The sale of the 265 million shares was made via a bookbuilding underwritten by Credit Suisse.
• Hart is also selling Carter Holt Harvey's building supplies business for more than $2.3 billion.

Graeme Hart is finishing off the year with a $3.5 billion play for packaging assets around the world.

His company Rank yesterday disclosed it was buying International Paper's drinks packaging division for $725 million and launching a takeover bid for listed Swiss packaging group SIG that values the firm's shares at $2.8 billion.

The bid puts Hart in the thick of a takeover battle. His offer trumps an earlier bid for SIG - by Norway's Elopak and private equity group CVC Capital Partners.

If he gets both assets they would link with the packaging business of Carter Holt Harvey - the former International Paper subsidiary he acquired at the start of this year for $3.3 billion - and will set the billionaire on his way to become a force in international packaging.

"Combined, the two businesses would have sales of $US2.75 billion ($4 billion), employ 7700 people and would offer a range of beverage and food packaging solutions from a global network capable of servicing regional and multinational customers," Rank said last night.  Carter Holt's packaging business has sales of about $600 million.

Before the announcement, SIG's shares in Switzerland were trading at 358 Swiss francs ($423.8), below Hart's bid of 370 franc but above the Elopak offer of 325 francs.

SIG manufactures cartons for food and drink products, as well as machinery and in 2005 it had sales of $2.7 billion. It employs more than 4700 people and is divided into two divisions - Combibloc and Beverages.

Rank said the acquisition of International Paper's beverage packaging arm was expected to close on January 31, subject to the receipt of regulatory approvals and other conditions.

It specialises in producing liquid paperboard packaging for fresh milk, dairy and juice. It includes a 700,000-tonne pulp and paper mill at Pine Bluff in Arkansas - similar in size to the Carter Holt Harvey Kinleith mill - as well as other facilities scattered across the US, Canada and Asia.  The business employs about 3000 people and produces more than 670,000 tonnes annually of packaging. The business had net sales of about $US859 million in 2005.

The deal caps off an epic year for the billionaire, that started with the privatisation of Carter Holt.

This month he completed the break-up of Burns Philp - the Australian food company which he bought into in 1997 - when he sold his Bluebird snack business to US food and drinks giant Pepsico for $245 million.  In May, Burns Philp's Uncle Toby brand was sold to Nestle for about $1.1 billion. That and the float of the Goodman Fielder business last year gave Burns Philp $2.9 billion, net of debt. Hart privatised Burns in November for $1.5 billion.

At the time analysts said he had enough equity to raise money for acquisitions worth more than $12 billion. That was not counting the unknown level of equity he has in Carter Holt Harvey.  He has since sold most of the group's forests to American firm Hancock for about $1.5 billion.

Hart is also understood to have looked at Australian packaging company Amcor. Market commentators say the frenzy of private equity in Australia has pushed prices higher than Hart is interested in paying.

BIG MONEY
* March: after paying more than $3.3 billion, Hart gains full control of Carter Holt Harvey.
* May: Burns Philp sells Uncle Toby's business to Nestle for $1.1 billion.
* August: Hart makes full takeover bid for Burns Philp.
* October: CHH buys nine ITM hardware stores. CHH sells forest assets for $1.5 billion.
* November: Hart gains full control of Burns Philp.
* December 7: Sells Bluebird for $245 million.
* December 19: Agrees to buy International Paper's drinks packaging business for $725 million and launches bid for Switzerland's SIG.

Australasian food giant Goodman Fielder is restructuring its New Zealand division, a move which has prompted the resignation of local managing director Alison Taylor.

The listed company's dairy and baking businesses in New Zealand will now operate as individual business units rather than as part of a larger GF Fresh New Zealand division.

Taylor will leave next month.  There were no plans for downsizing, job cuts or other changes, a Goodman Fielder spokesman said.

"I'm sure there'll be gains but savings isn't the issue, it's a matter of providing focus to the business."  Taylor had the option of staying, he said.  "But she's chosen to go, which is fair enough because her job's a bit smaller now than what it was."

The purpose of the restructuring was to improve the performance of both businesses "particularly the dairy business, and to that end, they've appointed a specialist in that area", the spokesman said.

David Glik - currently group executive, marketing and innovation at National Foods - will become managing director of Goodman Fielder's New Zealand Fresh Dairy division.  Phil Hand has been appointed managing director of the Fresh Baking New Zealand division and will report to GF Fresh Baking managing director Gordon Hardie.

In November the company said it expected to meet its forecast earnings and dividend for the year despite expecting difficult trading conditions in the last part of the year.

Last week Goodman Fielder confirmed it would pay the full acquisition price of $869.59 million for New Zealand Dairy Foods Holdings, which had achieved revenue targets since the deal was announced.

The company's share price closed unchanged at $2.58 yesterday. It has risen 9c since the start of the year.

Goodman Fielder was delisted in 2003 when Graeme Hart vehicle Burns Philp executed a A$2.25 billion ($2.54 billion) takeover.  The business, plus dairy assets belonging to Hart's Rank company, was relisted in December, 2005 ,by Burns Philp with a value of A$2.65 billion and raising A$2.12 billion.

Hart bought into Burns Philp in 1997 and in November was successful in his bid to take full control of the company - gaining access to its $2.9 billion in cash, Blue Bird Foods and a 20 per cent stake in Goodman Fielder.

GOODMAN FIELDER
* More than 6000 employees across Australia and New Zealand.
* Brands include Vogel's, Freya's, Meadow Fresh, Tararua and Kiwi Bacon.
* Products delivered to more than 29,000 outlets every day.
* Graeme Hart still owns a 20 per cent stake.

Graeme Hart has capped off an epic year of wheeling and dealing by selling his Bluebird snack business to US food and drinks giant Pepsico for $245 million.

Pepsico has one of the world's biggest salty-snack food businesses in Frito-lay, but has never had a presence in New Zealand. It was tipped this year as a likely contender to take Bluebird.

In 2003, when Hart was taking over Goodman Fielder, a partnership between Pepsico and Pacific Equity Partners was regarded as his most serious rival bidder.

The sale, due to be completed by January 4, completes the break-up of Burns Philp - the venerable Australian food company which Hart bought into in 1997 and paid $1.5 billion to gain complete control of last month.

The price tag is in line with market expectations, so it will not alter calculations of Hart's wealth, but it does add to the growing cash pile he and his Rank Group team have available to make more acquisitions.

The NBR Rich List put his fortune at $2.75 billion in July.  As usual, the media-shy Hart was not available yesterday. 

In May, Burns Philp's Uncle Toby brand was sold to Nestle for about $1.1 billion.

That and the float of the Goodman Fielder business last year gave Burns Philp $2.9 billion, net of debt.  Analysts say he has enough equity to raise money for acquisitions worth more than $12 billion.

And that is not counting the unknown level of equity he now has in Carter Holt Harvey.  Hart took over and delisted the forest products company in March, paying about $3.3 billion.

It is not known what level of debt he took on.  He has since sold most of the group's forests to American firm Hancock for about $1.5 billion.

Last year, Bluebird bought Krispa and Aztec from Hansells NZ - then owned by Gary Lane.

Speculation has now turned to Hart's next acquisition.  He is understood to have looked at Australian packaging company Amcor, but has not made a move towards buying it.  Market commentators say the frenzy of private equity in Australia has pushed prices higher than Hart is interested in paying.

BUYING, SELLING
* March: After paying more than $3.3 billion, Hart gains full control of Carter Holt Harvey.
* May: Burns Philp sells Uncle Toby's business to Nestle for $1.1 billion.
* August: Hart makes full takeover bid for Burns Philp.
* October: CHH buys nine ITM hardware stores. CHH sells forest assets for $1.5 billion, and buys a mill in Pine Bluff, Arkansas, and other beverage packaging plants from International Paper for between US$500 million and US$600 million.
* November: Hart gains full control of Burns Philp.
* Yesterday: Sells Bluebird for $245 million.

Graeme Hart and Eric Watson have little in common except that they are both extremely rich and have made recent takeover offers for their listed vehicles.

As the accompanying table shows, the 21st century has been particularly prosperous for both individuals with Hart's net worth leaping from $200 million to $2.75 billion, while Watson has jumped from $110 million to $500 million (the latter figure has recently been revised up from $350 million).

But the two businessmen have travelled different paths to achieve their wealth. Hart has been hands-on, focused and has built a team of extremely competent associates while Watson has been a relatively passive investor with little focus and has failed to build a competent support team.

In addition, Hart has created wealth for minority shareholders in his listed companies whereas a large percentage of individuals who invested in Watson's numerous stock exchange vehicles have lost money.

This is the reason why investors will be hoping that Hart returns to the sharemarket if his bid for Burns Philp is successful. It is highly unlikely, though, that the NZX will see Watson again after he completes the PRG Group acquisition.

There was only the faintest sign of Hart's impending success at the Whitcoulls annual meeting in the Kupe Room, Aotea Centre, on October 25, 1995. No more than 20 or 30 shareholders attended, the meeting was over in a flash and the highlight was Hart's young son making happy noises at the back of the room.

Whitcoulls had just reported a 16 per cent reduction in net earnings to $20.2 million, mainly due to the disappointing performance of the Australian acquisition Angus & Robertson. Hart's 64.5 per cent Whitcoulls stake had a sharemarket value of $170 million at the time (the listed entity was called Rank Group until Whitcoulls was acquired from Brierley Investments in 1991).

The next year, Hart made a successful bid for Whitcoulls, valuing it at $282 million and, shortly afterwards, onsold it to Blue Star for $320 million. Eric Watson was running Blue Star and Maurice Kidd, his long-time business associate, was its financial controller.

In mid-1997, Hart purchased 19.9 per cent of Australian food conglomerate Burns Philp for A$260 million or A$2.50 a share. Three months later, Burns Philp's share price had fallen below A$1 after a poor result and Hart's investment was worth less than A$50 million.

The National Business Review's Rich List estimated that Hart's net wealth had plunged from $200 million in 1997 to a mere $25 million in 1998.

But Hart's true qualities came to the fore during this difficult period. He played a major role in Burns Philp's turnaround, which included the acquisition and subsequent 80 per cent sale of Goodman Fielder.

The country's richest individual has gone from strength to strength and, this year, completed the takeover of Carter Holt Harvey for $3.3 billion. His offer for the remaining 42.6 per cent of Burns Philp, which values the company at A$3.1 billion ($3.7 billion), will cost Hart A$1.3 billion.

As Hart's shareholding in Burns Philp is worth more than A$1.7 billion, the Sydney-based company represents a large proportion of his wealth. If the Burns Philp offer is successful, Hart will obtain full control of nearly A$2.5 billion of cash, a 20 per cent Goodman Fielder stake worth in excess of A$500 million and NZ Snacks, which has an estimated value of nearly A$200 million.

The deal makes sense for Hart and his bankers as he will get full access to almost A$2.5 billion of cash for an outlay of only A$1.3 billion. Hart may also believe the huge amount of private equity money has inflated asset prices and there are limited attractive opportunities for Burns Philp to utilise its cash.

This contrarian approach is an important part of Hart's success, as is his ability to execute deals, make these acquisitions work and attract and keep top-quality executives.

By contrast, Watson is a deal-maker with limited operational abilities and, most importantly, an inability to attract and retain top-quality executives. A notable exception is Stefan Preston, who runs Bendon for PRG.

Watson first became involved in PRG (then called Pacific Retail Group) in 1998 when he made a takeover offer at $1.30 a share. This valued the target company at $59 million. Watson ended up with 73.7 per cent after the two major shareholders, Murray International (58 per cent) and Roger Bhatnagar/Greg Lancaster (12 per cent), sold to him.

Watson made another unsuccessful offer in 2001 at $1.76 a share. This valued the target company at $89 million.

The next year, he made a third bid at $2.25 a share. This valued PRG at $116 million, but Grant Samuel produced a strong negative response after assessing the company was worth between $223 million and $248 million ($4.31 to $4.80 a share).

Watson then turned PRG into an investment company and one of his first investments was a stake in Burns Philp.

Meanwhile, he became involved in several listed companies including RMG (in receivership), Strathmore (now Media Technology), Eldercare (Abano), Advantage (Provenco), Metlifecare and AQL (Certified Organic).

PRG made the ill-conceived PowerHouse acquisition in 2003 and as a result has had to sell Noel Leeming, Bond & Bond and PRG Finance Group. PowerHouse has been a disaster for PRG and the company hasn't paid a dividend under Watson's stewardship.

Watson's fourth offer for PRG at $1.22 a share values the company at only $76 million compared with Grant Samuel's mid-point valuation of $235 million four years ago.

This offer will be successful because the bidder started with 81.3 per cent, AXA has accepted in respect of its 12.3 per cent (AXA effectively stymied Watson's earlier offers) and Grant Samuel now values the company at between $66 million and $107 million ($1.06 and $1.72 a share).

It will cost Watson $14.2 million to acquire the outstanding 18.7 per cent and, in return, he will obtain full control of Bendon, Living & Giving and an unknown amount of cash.

It is difficult to ascertain PRG's true financial position because PowerHouse was placed in administration in the UK this month, the company has not released its March 2006 year annual report and is delisted from the NZX.

The huge spread in Grant Samuel's valuation range indicates that PRG is in a mess and there is much uncertainty over the true value of the company.

By contrast, Burns Philp is in great shape and is relatively easy to value.

Watson's stewardship of PRG has been a disaster yet his net wealth has risen from $275 million to $500 million since the PowerHouse acquisition. The main reason for this is his relatively passive holding in the unlisted Hanover Group. The true value of this holding can only be ascertained when he sells his stake through a trade sale, IPO or to the other Hanover shareholder.

The capitulation of AXA to the PRG offer clearly indicates that sharemarket investors have had enough of Watson. His PowerHouse acquisition was the last straw and he seems to have limited ability to extract himself from difficult situations, unlike Hart with Angus & Robertson and Burns Philp in the 1990s.

Billionaire Graeme Hart looks set to pocket as much as $240 million in gross profit selling the assets he bought in August from Fonterra.  Details of Hart's gain are disclosed in draft prospectus documents for the A$2.27 billion float of transtasman food giant Goodman Fielder, which is taking over the former Fonterra assets.

They show Hart is selling his New Zealand food operations for A$782.6 million ($850 million) to Burns Philp. Burns Philp, 54 per cent owned by Hart, will combine these assets with its baking, spreads and oils business to create Goodman Fielder, which will be floated on the New Zealand and Australian stock exchanges.

Based on an analysis of divisional earnings, the price is made up of around $654.5 million for the former Fonterra assets. Hart bought the assets for the equivalent $416 million at the end of August. The remainder of the $850 million is made up of Hart's own dairy operations including Puhoi cheese.

Before this latest deal Hart was worth $2 billion, according to the National Business Review's The Rich List. He will make much of the gain by cutting costs, which come at some expense.

The gain will represent a return of almost 60 per cent in just over three months and is certain to raise questions about Fonterra's deal-making skills and its management of the Meadow Fresh operations.

The deal will be the second time Hart has got the better of Fonterra. In 2002, it sold a half share in New Zealand Dairy Foods to Hart in a deal which valued the whole business at $310 million.

Fonterra in August bought back most of the assets, including the Anchor Milk and Fresh n' Fruity yoghurt brands, it had sold to Hart for the equivalent of $754 million. It paid with $338 million in cash and contributed the Meadow Fresh assets then valued at $416 million.

The Meadow Fresh assets are now being sold into the new Goodman Fielder.  Fonterra said it was comfortable with the latest transaction, which had been independently examined. It said the analysis did not take into the strategic benefits of the assets it gained.

Burns Philp yesterday declined to comment on why it was paying such a price for the businesses. But it understood its purchase will also be examined by an independent appraiser.

Goodman Fielder
* Chief executive Peter Margin.
* Brands: Molenberg, Vogel's, Ernest Adams, Edmonds, MeadowLea, Meadow Fresh, Tararua, Puhoi, Kiwi, Huttons.
* Due to float on the NZX and ASX by December with a minimum of A$1.6 billion offered to the public.
* Expected total share value A$2.27 billion.
* 2006 Sales A$2.46 billion; 2006 Operating Profit: A$355.6 million.

Graeme Hart's Burns Philp will give the New Zealand sharemarket a huge shot in the arm when it spins off its Goodman Fielder food business this year.

The Business Herald understands Burns Philp aims to offer investors an 80 per cent stake in the business, worth A$1.3 billion to A$1.9 billion ($1.4 billion to $2.07 billion). The exact value of the offering is dependent on demand for shares. The Kiwi billionaire controls Burns Philp through his private company Rank, which owns a 54 per cent stake.

New Zealand investors, including retail investors, are expected to buy $200 million to $300 million of the shares with the rest going to investors in Australia, the United States, the United Kingdom and Asia.

The company will have a market value of about A$1.6 billion to A$2.3 billion. This will place it in the benchmark ASX-200 and the NZX-50 indicies and ensure reasonably strong demand from large institutions for the shares.

It will have a dual primary listing in New Zealand and Australia. Timing of the float, which will give priority to existing Burns Philp shareholders and holders of the company's converting preference shares, is unclear although Burns Philp has said it was aiming for the latter part of this year.

The company is to be created from the merger of the dairy and cured meat assets Rank bought from dairy giant Fonterra last month and Burns Philp's baking, spreads and oils business. In the year to last June, the business would have had sales on a pro forma basis of A$2.3 billion and trading profits of A$360 million to A$380 million. But bankers selling the shares are expected to make much of the growth in earnings.

The company is expected to have around A$1 billion of debt, giving it an enterprise value of around A$2.9 billion on a conservative estimate of its market value.

Since similar businesses trade on an earnings multiple of around seven to eight times prospective trading profits, the company should turn in around as much as A$414 million next year.

Much of the earnings growth is expected to come from the brands Hart acquired from Fonterra, including the dairy brands Meadow Fresh, Naturalea, Tararua and Chesdale and the Kiwi, Huttons and Top Hat cured meats brands.

These are expected to benefit from Hart's cost-cutting zeal. Many of the existing Goodman Fielder baking, oils and spreads brands - which include Molenberg, Quality Bakers, Vogels, Ernest Adams, Meadow Lea and Newman's Own - are mature slow-growth operations.

Many were also part of the Goodman Fielder business Burns Philp took over and delisted from the stock exchange in 2003. It is the prospects for these businesses that have muted enthusiasm for the company among Australian sharemarket observers.

The deal is a plum for investment banks, worth as much A$30 million in fees. Credit Suisse First Boston, which has a long relationship with Hart and Burns Philp, is expected to take the lead manager role. Its local affiliate, First New Zealand Capital, is sure to benefit. Other banks thought to be in the running to share the fees include Goldman Sachs JBWere, UBS and Macquarie Bank.

The structure
* Graeme Hart's Australasian food business Burns Philp will retain a 20 per cent stake in the Goodman Fielder business it plans to spin off on to the New Zealand and Australian Stock exchanges.
* The business will be sold to investors worldwide and is expected to have a market value of A$1.6 billion to A$2.3 billion.
* The company is to be created from the merger of the dairy and cured meat assets Hart's private company Rank bought from dairy giant Fonterra and Burns Philp's baking, spreads and oils business.

The country's wealthiest person, Graeme Hart, is media shy but lately can't keep out of the news.

In the past couple of months he has reeled off three deals, each of which has
stunned commentators in their audaciousness and the prospect of huge additional
financial benefits for the double billionaire.

In August, his Rank Group pulled off a deal where its NZ Dairy Foods (NZDF)
swapped brands with Fonterra, netting Mr Hart $338 million, $28m more than Rank
paid for the entire company three years earlier.

A few weeks later, he emerged from left field to snatch control of New
Zealand's biggest forest products company, Carter Holt Harvey. He paid $1.65
billion for International Paper's 51 percent stake, triggering a full takeover
offer at $2.50/share for the rest -- an offer few shareholders look likely to
accept as they coat-tail Mr Hart.

Yesterday, came the third big play -- getting his 54 percent owned Burns Philp
(BP) to spin off the bread, oils and spreads assets of Goodman Fielder (GF)
into a separate company to be relisted on the ASX and NZX.

As part of that deal, GF, one of the biggest names in Australasian corporate
history, will buy NZDF, the country's second largest dairy products company,
for a yet to be disclosed sum.

BP will retain GF's snacks business including premium brands such as Uncle
Toby's and Le Snak and Bluebird and about 30 percent of GF.

Over the years, Mr Hart, the 50 year-old former tow truck operator, has pulled
off a series of risky, and increasingly big takeovers, beginning with
Government Print and Whitcoulls.  He is known for his meticulous planning, risk-taking, tenacity and flashes of extraordinary luck.

His modus operandi is to buy non performing assets and wield the axe to improve returns. The result of his work could be seen this week with the closure of Mainland Products' Meadow Fresh yoghurt plant in Christchurch with the loss of 50 jobs, and 115 jobs lost at Carter Holt's Rainbow Mountain sawmill in Rotorua.

In, 1997, he spent most his then fortune, some $A260m, to buy 19.9 percent of BP, only to find a big hole in its earnings. In an oft-recounted story, the shares plunged from $A2.45 to 3.4c before he turned the herbs and spice company around to the extent that in 2003 it could takeover GF for $2.5 billion.

So what do we make of Mr Hart's latest move?  The stock exchange will benefit from a big new listing that is likely to raise over $1 billion in an IPO. GF will have assets of around $A3.2 billion and be capitalised at around $2.15 billion -- not far shy of what BP originally paid for it.

The GF businesses generated sales of around $A2 billion and had earnings before interest, tax, depreciation and amortisation (ebitda) of almost $A300m last year.

Rank is likely to be paid around $525-635m for NZDF.  BP, which sold its US yeast and spice businesses last year for $1.9 billion, will essentially be left with the remaining GF brands plus a strong balance sheet after repaying $US820m ($NZ1.20 billion) of junk bonds used to fund the GF purchase.

It will be a cashed up predator ready to pounce on some major new acquisition or, if it fails to find a suitable target, could flick those tasty assets. They are valued at $A513m and generated ebitda of $A118m last year.

Tom Degnan, BP's managing director and Mr Hart's right hand man and hatchet
wielder, said this week's deal had nothing to do with the need to raise cash to
fund the Carter Holt deal.  Analysts doubt that, given Carter Holt's size.

He said the rationale for the spinning off GF was that BP had added as much
value as it could through cost reductions. His axe started one week after
purchase with 500 head office and went on to slash dozens of mills.

Mr Degnan said marrying GF and NZDF would create ``synergies'', although
analysts question the efficiencies of putting dry groceries with chilled
products. He also foresees economies of scale.

Analysts said the new GF will be steady earner with limited growth prospects --
essentially a good yielding stock that may hold its value in troubled times.
After all every needs to buy bread and butter.

While the price GF will pay for NZDF has not been announced, Mr Hart has agreed
to sell it for the same price-earnings multiple as achieved for the GF float.
That means Mr Hart will not get a control premium and is designed to counter
cynicism that Rank has received special treatment.

Macquarie Equities investment director Arthur Lim says the IPO will go well as
there are no other major food companies in Australasia.

``If Burns Philp and Mr Hart have little presence left in Goodman Fielder, it
might not be a very appealing float, but if he leaves enough skin on the table,
it could prove attractive.''

In the latter case, BP shareholders may well take up their preferential
entitlements.

Mr Lim said BP has a big following of retail investors in New Zealand, who like
investing with Mr Hart. Those who originally went with Mr Hart into BP are
still behind, but those who invested later have done well.

Mr Lim said there will be an institutional book-build to price the GF float,
which means it will be well scrutinised.

``It will be a stable, cashflow type entity that provides a good yield, and
therein lies the rub -- people who follow Graeme Hart are in there for the
capital growth and for the excitement factor.

``This is quite a different beast altogether. The end result may be that a
different profile of investor emerges to buy Goodman Fielder.''

Those wanting excitement and growth, but are willing to wait for a dividend may
be better off investing in Carter Holt. A lot of smart money has already gone
that way, including Montana wines founder Peter Masfern.

Mr Lim said the Australian media and commentators have always been grudging and
sceptical of Mr Hart.

``I have yet to see an article that even attempts to be objective about him.''

They claim he has simply been lucky.

``If he was an Australian who has done what he had done, he would be up there
with Kerry Packer and Rupert Murdoch.''

Mr Lim said investors should admire Mr Hart who, unlike a lot of so-called
entrepreneurs, had created wealth not just himself, but for minority
shareholders.

```It's great that we have a real live New Zealand entrepreneur with a track
record of creating value as opposed to the nonsensical entrepreneurs we have
had in the past who have used sleight-of-hand to create value for themselves
but nothing for anyone else.''

``People who have been on Mr Hart's coat-tails have done very, very, very
well.''

Graeme Hart is already New Zealand's richest man. His latest move must make him the nation's coolest under pressure.

After flogging off a $2.1 billion chunk of his international food business last month, Hart raised eyebrows by putting most of the money straight in the bank. By putting only $500 million towards the huge debt of his Australian company, Burns Philp, Hart could be costing it as much as $300,000 a day, analysts say.

That's because the cost of holding cash - the difference between the interest earned on the cash and the interest paid on the debt - will quickly run into the tens of millions.

Hart is unperturbed. He's going bargain hunting and he's not letting anyone rush him. "When we find the right opportunity we will move on it. If we don't ... then you just have to be patient," he told the Business Herald. "We're not particularly bothered about what people think and write."

Selling Burns Philp's yeast and spice businesses to Associated British Foods sparked speculation in Australia about what the former panel beater would buy.

The stripped-back Burns Philp is the Australasian businesses of Goodman Fielder - including classic New Zealand brands such as Edmonds, Ernest Adams and Meadowlea.

Hart puts the food into Australasia's lunch boxes, pantries and on breakfast tables.

He owns a 54 per cent controlling stake in Burns Philp. Dealing with the money from the spice deal was a basic financial choice, the kind most of us face every day - pay off debt or keep some money for that unbeatable bargain just around the corner?

Hart just deals with bigger numbers. His leveraged and hostile takeover of Goodman Fielder last year left Burns Philp with debt of nearly $2.9 billion. That will drop to about $2.3 billion after 25 per cent of the Associated British Foods deal proceeds are paid in.

Hart says holding the cash is just one of the costs of doing business, and sighs at the inevitable debt question. "Look, we've divested a business and we're very comfortable with the terms at which we divested it. If we weren't, we wouldn't have done it. That leaves us with a couple of billion coming through the door. It's got nothing to do with debt."

Were it not for Hart's charm and reputation for ego-free business dealings, it would be easy to mistake that supreme confidence for arrogance.

He is unshakeable in the belief that he and his trusted sidekick, Burns Philp chief executive Tom Degnan, will find another winner. He talks about debt as if it was an ordinary home loan - except that most home-owners sound considerably less relaxed when discussing their mortgages.

Many Hart-watchers are picking that, because of the cost of keeping the cash in the bank, Burns Philp will make its move sooner rather than later. Most think it already has an acquisition lined up. Hart says categorically: "We don't."

But speculation was so intense last week that the share price of the No 1 contender, Australia's largest listed dairy company, National Foods, rose 4 per cent. Ironically, the biggest shareholder in National Foods is Fonterra - the local competition for Hart's other business, New Zealand Dairy Foods.

Fonterra owns 17 per cent of National Foods and has made no attempt to increase that despite having plenty of opportunity. One unknown is whether Fonterra would consider selling. It might see that as giving too much of a leg-up to an Australasian competitor. But the possibility isn't totally far fetched, a dairy industry source says. National Foods would fit well with Burns Philp in Australia by providing ingredients for its array of foods.

More likely to deter Hart is the fact that it is already in good shape and fully priced. "There's a good chance he will be able to find a better deal somewhere else," the source says.

Burns Philp's style is to look for a business that needs work and is going cheap. Hart is giving nothing away: "I've heard the speculation about National Foods and I'm not going to comment on that. It only fuels speculation." The only thing that Burns Philp has ruled out is buying NZ Dairy Foods.

Other food businesses touted as possible targets include Australian biscuit company Arnotts and canned pineapple company Golden Circle. Buying Golden Circle would require Hart to convince 700 proud farmer shareholders to sell - an unenviable task.

Not that Hart is afraid of difficult buys. His takeover of Goodman was about as hostile as they come. The ruthless restructuring that followed - the head office virtually vaporised - proved his cost-cutting ability.

The success of the Goodman restructuring will be revealed when Burns Philp issues its full-year result this month. That should make it clear whether Hart's relaxed demeanour is justified. It may be that there has been too much focus in the speculation on Australasian acquisitions.

Hart says a geographic spread hedges against local economic downturns. "We're not geographically constrained. We're not just focused on New Zealand and Australia. We've demonstrated to our satisfaction, and to the world, that we are well capable of running a global business."

But , some countries are more likely prospects than others. "We fully appreciate the various risks between countries," he says. "The United States, Australia and New Zealand are relatively low risk by comparison with, I don't know ... India, Columbia or ... Venezuela."

When Hart bought Burns Philp for $300 million in 1997, he attracted the scorn of the Aussies. To be fair, it looked like he'd been sold a lemon. Within months, his shares were almost worthless and the company was in the hands of the bankers. But, against the odds, he traded his way out.

This time around, he has some supporters across the Tasman. One analyst there said: "I think people will support Hart and, certainly, the Australian investor market has a huge amount of respect for him. Hart's definitely the guy who looked like he was on his knees and then came back and stuck his fingers up in the air at everyone. To an Australian, that's probably the best way to get respect - that old Aussie battler kind of mentality."

Something that may confuse Hart's critics is his lack of interest in making money for its own sake.

That's not what gets him out of bed in the morning. He describes his personal wealth - estimated at much more than $1 billion - as "a by-product" of what he does. "You can only have so many cars," he once told the Herald.

His motivation is doing business and building businesses. Like a sportsman, he is always striving to play the perfect game. Appropriately for a man in the baking industry, he follows a simple recipe - buy, build, sell ... buy again.

Whether he's got his measurements right remains to be seen. But as recipe for whipping up speculation, it's unbeatable.