Comvita pulls out of takeover talks

Comvita pulls out of takeover talks after failing to reach a deal on price; shares drop 7.1%

By Rebecca Howard

May 21 (BusinessDesk) - Comvita pulled out of talks with an unnamed third party looking to take over the NZX-listed manuka honey company when it couldn't reach a deal on price. The stock fell 7.1 percent.

Last month Comvita said the third party was undertaking due diligence to assess the potential acquisition of all or substantially all the shares in Comvita and would update the market in mid-May.

According to Comvita the deal "could have been very positive for the Company and ‘NZ Inc’ in driving the ‘Comvita brand’ forward into new markets and new sales channels." However, in negotiations "we could not bridge the considerable distance between us on price and therefore, Comvita directors unanimously agreed to withdraw from the process."

As a result, "discussions between Comvita and that third party have now concluded with no agreement on a transaction. The due diligence process and further consideration of any proposal to acquire Comvita is now at an end."

The stock fell 48 cents to $6.29 on the news and is now down 19 percent so far this year.

Comvita's flagship manuka honey business can be volatile as weather conditions impact honey production. Last month it said after-tax operating earnings for the year ending June 30 are expected to be $8 million-to-$11 million, down from an earlier forecast for earnings of more than $17.1 million as adverse weather in the second half of the 2018 honey season hurt its honey harvest.

(BusinessDesk)

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