American ketchup maker, H.J. Heinz has announced the acquisition of Australian fruit juice and canned food maker Golden Circle through its Australian unit for $288 million in an all-cash deal.

According to the agreement, Heinz will buy all the shares of Golden Circle for $1.65 a share, a premium of 313 per cent to the closing price of $0.40 on 3 October.
Golden Circle shareholders will vote for the approval in December for the deal, which is subject to the mandatory regulatory approvals.

The deal will bring an end to the 61 year old Queensland company and one of the last remaining iconic Australian brands.

The board of Golden Circle and the company's largest shareholder, Anchorage Capital, which owns a 35-per cent stake in Golden Circle, have indicated that they would vote in favour of the acquisition. The board has also strongly recommended the shareholders to approve the deal.

In September 2007 Golden Circle spurned a $1 per share offer from Coca Cola-Amatil, the principal Coca-Cola licensee in Australia and independent manufacturer of its own soft drinks and mineral waters in favour of Anchorage, which pumped $35 million into the company by offering $.80 a share in a recapitalisation deal for a 35-per cent stake as Golden Circle had accumulated huge debts after running into heavy losses. 

The company had struggled for years due to stiff competition and some dubious business decisions made by the management which led to falling sales. The company last year transformed itself from a farmer owned co-operative to a publicly traded company in March.

Heinz says its contract with Golden Circle's growers will be maintained.

Golden Circle chairman, Philip Cave said, ''The board of Golden Circle believes that the Heinz proposal represents a compelling value proposition and is in the best interest of the company's shareholders. The certainty of timing and payment of the Heinz proposal is attractive, particularly during a period of difficult economic conditions.''

Chief executive, Craig Mills of Golden Circle said, "The acquisition provides the opportunity for a complementary product range offering a wide variety of everyday consumer food and beverages under iconic brands.''

Heinz managing director, Peter Widdows said, "Juices is new territory for us and we are acutely aware of Golden Circle's origins and the importance of Golden Circle to the farming community. Our desire is to maintain contracts between growers and Golden Circle, which would benefit from potential increases in volume over time as the combined sales and marketing strength of a combined Golden Circle and Heinz is realised."

The Golden Circle brand is among the top 15 on Australia's supermarket shelves and is one of the most recognised Australian-owned companies. It also owns the Original Juice Company and manufactures over 500 products including shelf stable fruit and vegetables, fruit juices fruit drinks, cordials, soft drinks, jams, conserves and baby food.

The H.J. Heinz Company, headquartered in Pittsburgh, Pennsylvania, is the most global of all the US-based food companies and is synonymous with ketchup. Its core products include sauces, meals, snacks, and infant / nutrition products.