NORTH RYDE, NEW SOUTH WALES, AUSTRALIA — Nisshin Flour Milling Inc., a subsidiary of Tokyo-based Nisshin Seifun Group Inc., has agreed to acquire Goodman Fielder’s Champion flour milling business in New Zealand for NZ$51 million ($42.4 million). The price excludes net cash proceeds of NZ Milling receivables and payables.

The transaction is expected to be completed in February 2013, subject to the satisfaction of conditions.

“This transaction is another example of the successful execution of our strategy to divest non-core businesses to enable us to focus our capital and marketing expenditure and our internal resources on our core categories and brands,” said Chris Delaney, chief executive officer of Goodman Fielder. “Together with the sale, we have also structured a long-term supply partnership with Nisshin to ensure Goodman Fielder maintains an efficient supply of flour and related products for our business in New Zealand. With global scale and expertise in milling, Nisshin brings considerable scope to provide further efficiency and innovation to create value under this long-term supply agreement.”

According to the company’s web site, Champion Flour Mills produces approximately 60% of New Zealand’s flour and cereal based products at two milling sites in Christchurch and Mount Maunganui. The company’s product range includes flours, meals, bread and cake mixes, margarines, shortening and a variety of other baking ingredients.

Goodman Fielder said it will retain the business where it sells flour to retailers, in-store bakeries and hot bread shops, supported by the flour supply agreement with Nisshin. Meanwhile, Nisshin will be responsible for supplying to commercial and industrial customers in New Zealand.

Mr. Delaney said net proceeds of the sale will be used primarily to repay debt and further strengthen Goodman Fielder’s balance sheet.

“I am pleased with the significant progress we have made in strengthening our balance sheet as part of our strategic plan,” he said. “This transaction builds on our other recent initiatives to ensure our group financial position is sufficiently strong and flexible to enable us to pursue our strategic agenda.”

Nisshin said it intends to retain all existing staff and shortly will offer new contracts.

Nisshin is the largest flour miller in Japan with a market share of approximately 40% and milling capacity of more than 8,000 tonnes per day. It has revenues of ¥170 billion ($2.1 billion).

The acquisition represents a longstanding priority to expand overseas. Indeed, the Nisshin Flour web site has candidly spelled out this ambition for longer than a year.

“To cope with this globalized business environment and factor its implications into its medium- and long-range planning, Nisshin Flour Milling Inc. is in the process of building an international flour milling network, with bases already operating in Canada and Thailand,” the site says.