Australian food firm Goodman Fielder said it has received a A$1.3 billion ($1.2 billion) takeover proposal from Singapore's Wilmar International and Hong Kong's First Pacific but that the offer undervalues the company.
Australian and New Zealand food assets have become increasingly attractive to offshore investors, as the countries position themselves to provide for Asia's rapidly growing middle-class.
Shares in Goodman Fielder jumped 18 percent to match the offer price of A$0.65 per share, a 2-1/2 month high.
Wilmar, which already owns 10 percent of Goodman Fielder, the maker of Country Life bread and Meadow Lea margarine, said the offer represented an opportunity to "create a leading Asia-Pacific agriculture and consumer staples company".
The A$0.65 per share bid compares with Goodman Fielder's last closing price of A$0.55 on Thursday. The offer is conditional upon the unanimous recommendation of Goodman Fielder's board as well as the approval of Wilmar and First Pacific's boards.
First Pacific is a Hong Kong-listed investment management company. The two will form a 50-50 joint venture to proceed with the transaction.
"The Board believes that the current proposal materially undervalues Goodman Fielder and is opportunistic," Goodman Fielder said in a statement.
Don Williams, chief investment officer at Platypus Asset management, said that while Australia has high-quality businesses in the food producing sector, Goodman Fielder has historically generated dreadful returns for their shareholders.
The company downgraded its earnings guidance for 2014 this month and said it might face asset write-downs.
"I am not sure if Goodman Fielder has any strategic value but it's a cheap business in the right space, presumably that's the logic behind the bid," Williams said.
Wilmar said Goodman Fielder would be privatized and its shares would be de-listed from the Australian and New Zealand stock exchanges if a deal was struck.
Goodman Fielder said the company would continue to assess other opportunities to maximize shareholder value. It has hired Credit Suisse as its financial adviser.