Will Goodman Fielder lose a major shareholder?


Fresh from divesting its oils and fats division, Integro Foods, to Graincorp (ASX: GNC) for $170 million, Goodman Fielder (ASX: GFF) is back in the news.

Singapore-based shareholder, Wilmar International, is rumoured to be looking to off-load its 10% stake in Goodman Fielder, with a Macquarie Group (ASX: MQG) analyst speculating Wilmar International opposed the sale of Integro Foods and may now look to sell out.

There is certainly some action in the food and agricultural sector at the moment with the share prices of many in the sector struggling.

Rural property and water rights owner PrimeAg Australia (ASX: PAG) recently announced that it was putting itself up for sale having consistently traded below its net tangible asset (NTA) backing. Meanwhile, stock feed supplier Ridley Corporation (ASX: RIC) has been trying to unlock the value of its assets, most recently by taking bids for the underperforming Cheetham Salt division.

Continuing the trend, rural service provider Elders (ASX: ELD) has announced a plan to divest its automotive components division and become a pure-play agriculture company, in the hope this may improve the share price. Elders has already attracted the interest of competitor Ruralco Holdings (ASX: RHL) who has been creeping up the share register.

The weather is always the great unknown for the agricultural sector. Most of the companies mentioned above have faced difficult weather related events in the past few years; however conditions have improved. Rains earlier this year have provided good conditions for beef producer, the Australian Agricultural Company (ASX: AAC) resulting in an improved financial performance for the half year to June.

Foolish takeaway

With an increasingly wealthy Asian middle class and Australia’s comparative advantage in food production, there are a number of listed companies with the potential to benefit from Australia becoming ‘Asia’s food bowl’.

To date there has been mixed success for many companies in the sector with the weather and high input costs often creating headaches. However, it would be Foolish to ignore the potential of the food and agricultural sector which may finally be entering a ‘sweet spot’.

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Motley Fool contributor Tim McArthur owns shares in Goodman Fielder, Macquarie Group and Elders. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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