SHAREHOLDERS of Perth-based Foodland Associated Limited have received an increase in the price offered by takeover hopeful Metcash Trading, valuing the company at approximately $1.1 billion. However, Foodland directors are still resisting the hostile acquisition attempt in the hope of securing a superior offer. In its revised bid, Metcash is offering an alternative of 2.79 Metcash preference shares for every one Foodland share held, or $8.55 cash per Foodland share with one Metcash preference share. The new scrip offer is 31 per cent higher than the earlier offer, while the cash offer is 24 per cent higher than the previous offer, announced to the market in December last year. Foodland, which owns the WA supermarket chain Action, and coordinates the Dewsons, Supa Valu and Eziway franchises, welcomed the increase in the Metcash offer, but urged its shareholders to “take no action” on the bid. This message was conveyed to the company’s shareholders in an Australian Stock Exchange announcement in which Food-land also outlined its plan to complete a demerger of the company and to continue talks with other potential suitors. The demerger, to which Metcash has also committed, would split the company’s New Zealand and Australian operations into separate entities, both to be listed. However, sceptics had earlier suggested that a break-up would create a takeover target for rivals Coles and Woolworths. But Metcash has moved to address these concerns in its latest offer, planning to create a taskforce with Foodland representation to oversee the break-up. Foodland company secretary Chris Bennett said that while Metcash had clearly responded to discussions between the two companies, Foodland was still pursuing other avenues to maximise return for its shareholders. Earlier this year, Foodland recruited the services of independent expert Grant Samuel, which valued the company at between $8.70 and $9.56. According to research by JP Morgan, the complex offer, which sits at the upper end of experts’ valuation range, still requires elaboration in terms of the contingent tax receivable. “While we can understand the increase in the cash bid toward the level of the scrip alternate, we question why Metcash has increased its scrip-exchange ratio. That the bid is now within the valuation range provided by Grant Samuel, in our view, is not a sufficient reason to increase this exchange ratio,” the research report says. Metcash, which was acquired by its South African parent Metoz in 1998, currently operates three east coast food and consumer goods distribution businesses, including IGA Distribution, Campbells Cash & Carry and Australian Liquor Marketers.