Why did Graeme Hart ditch the $3.6 billion trade sale of
Goodman Fielder at the last minute and revert to the more time-consuming, more
fee-laden and much more public initial public offering? It seems it was the
little matter of a leak.

A good example of the disclosure forced by floating Goodman
Fielder is Stephen Bartholomeusz’s column in the Smage today.
There’s nothing damaging in it, but also nothing that the average rather
private billionaire wants the financial press crawling all over to see how he
makes a buck. Or hundreds of millions of bucks, as this case may be.

The IPO was well in hand when US deal makers and investors
Bain Capital and Australian private equity mob Pacific Equity Partners came
knocking on Hart’s door with an offer to take it off his hands with a single

Hart had an interest in maintaining the new Goodman Fielder
as a public company, but the benefit of a trade sale couldn’t be ignored. My
mail is that he put the IPO on the backburner and gave Bain and PEP the OK to
make an offer on three conditions: Price, timing and confidentiality.

The price had to be as good as the float promised to be – the $3.6 billion offered was certainly in
the ballpark of the IPO’s indicative range of $3.55 billion to $3.75 billion
without the hassle – and the trade sale offer had to meet a strict deadline
which Bain and PEP also managed.

But the confidentiality condition stressed that there were
to be no leaks about the trade sale, especially anything that might be
construed as talking down the value of the IPO alternative. Somehow or other,
someone somewhere in the process apparently didn’t meet that condition.

The deal leaked and Hart stuck by his conditions. He said no
to the quick and easy $3.6 billion in the hand and went back to the uncertainty
of the float.

As the Bartho column clearly shows, Graeme Hart will do very
nicely indeed out of the IPO – and he has still managed to keep the option open
of revisiting that trade sale if the stock market doesn’t like the float as
much as everyone thinks it will.

It’s left for anyone to speculate about ultimate motives in
enforcing that third condition. Perhaps it’s a bit of very clever negotiation
that keeps two attractive balls in the air and very effectively provides a hard
valuation to the institutions who will decide the float’s pricing via a book

Or maybe it’s a hard example of someone who means what he