Comvita tells shareholders Cerebos bid too low

By Paul McBeth

Oct. 31 (BusinessDesk) - Comvita, the manuka honey-based heatheries maker, has told shareholders not to accept a $2.50-per-share offer from Cerebos New Zealand to take control of the company, saying it’s not good enough.

The board has named Grant Samuel as the independent appraiser of the $71.6 million takeover bid and is urging investors to refrain from accepting the offer until they receive more information and a recommendation.

“If Cerebos or any other party bids a share price that fully recognises Comvita’s growth prospects and profit potential, we may need to change our current advice,” chairman Neil Craig said in letter to shareholders. “As of now, we consider that the current Offer is a long way from meeting that criterion.”

Earlier this month, Cerebos NZ, the vehicle of Singapore-listed Cerebos Pacific, offered to buy Comvita at a 19 percent premium, saying it would operate the company on a standalone basis and use its links into Asia to grow the firm.

The bid prompted Comvita to spurn the “unsolicited, unwelcome, opportunistic” offer, though the board was aware Cerebos was undertaking due diligence.

Comvita’s Craig said shareholders need to be wary of accepting the current offer, as it could lock them out from a better bid.

The shares fell 0.4 percent to $2.70 in trading today, a premium of 8 percent to the Cerebos bid, and have surged 83 percent this year.

The offer came a month after Comvita settled a patent dispute with Brightwake, where it granted a sub-licence to the British rival letting it manufacture, distribute and sell its Algivon brand in territories where the Comvita subsidiary Apimed Medial Honey has patent protections. As part of the settlement, Comvita avoided a 226,000 pound payment.

The Te Puke-based company expects annual profit of between $7.3 million and $8.2 million, with sales likely to be between $91 million and $95 million. In its bid, Cerebos pointed out Comvita had missed meeting forecast guidance in the past four financial years.

Cerebos Gregg’s, whose local brands include Caffe L’Affare coffee, Bisto gravies, and Raro drink powder, recently invested $13 million to expand facilities in a joint venture at Mount Maunganui, and is spending $6 million on the country’s only instant coffee producing plant in Dunedin.

(BusinessDesk)

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