Comvita shares jump on $12.3 million acquisition of NZ Honey
By Suze Metherill
May. 22 (BusinessDesk) - Comvita shares jumped 8.8 percent after the maker of healthcare products based on manuka honey said it will buy New Zealand Honey for $12.3 million as part of a strategy to boost supplies of the raw material.
Comvita said the Timaru-based honey producer, which is owned by the New Zealand Honey Producers Cooperative and operates the Hollands Honey, 3 Bees and Sweet Meadow brands, recorded $27.3 million of sales in 2013. Te Puke-based Comvita has been looking to secure its own apiaries after honey shortages over the years crimped sales growth.
The shares gained 28 cents to $3.48 and have declined 12 percent this year.
If the 70 beekeeper shareholders accept the offer, Comvita will acquire all assets of NZ Honey, including land and honey processing assets in Timaru, the honey inventory at settlement and a long-term honey supply agreement with the co-op. Comvita will pay $7.3 million in cash and $5 million in shares, issued at $3.50 per share, held in escrow and released to the co-op annually over the next years.
"This acquisition goes a long way to address the supply constraints that have been challenging Comvita in recent years," said chief executive Brett Hewlett. "By purchasing New Zealand Honey and partnering with New Zealand Honey Producers Cooperative we are able to combine export initiatives and leverage Comvita's international distribution and premium brand image."
Earlier this month Comvita reported annual net profit of $7.5 million after reporting a first-half loss of $790,000 last November as price competition in Australia and the UK held back sales. The Hong Kong market was affected by greater scrutiny on New Zealand products in the aftermath of the Fonterra Cooperative Group's botulism contamination false alarm.