PEP agrees to buy Manuka Honey for undisclosed sum
By Suze Metherell
Sept. 11 (BusinessDesk) - Pacific Equity Partners, the biggest private equity firm in Australia and New Zealand, has agreed to buy Manuka Health, the functional food and dietary supplement company, for an undisclosed amount, subject to Overseas Investment Office approval.
The Te Awamutu-based honey firm currently has 37 shareholders, according to records on the Companies Office, with Watermann Capital a cornerstone owner. Founder Kerry Paul owns 7.3 percent, while Milford Asset Management owns 6.3 percent. The New Zealand Herald has reported the purchase price was $110 million.
Manuka Health was founded in 2006 and exports 90-plus products based on propolis, royal jelly, bee pollen, and manuka honey to 45 countries. It has annual turnover of more than $50 million.
The deal comes after the company ruled out a public offer in June as it looked for funding for a global roll-out of new products said to boost the antibacterial qualities of manuka honey and its pipeline of research and development.
"PEP approached us really only a short time ago really and they worked very quickly at doing their due diligence and negotiating an agreement with us," Paul told BusinessDesk. "They worked hard and fast."
Paul will stay on as chief executive, and there will be no staff changes, he said.
Asian demand for manuka honey has seen the price for all New Zealand honey increase, amid a global honey shortage. New Zealand bees produced $187 million of exported honey in the June 2014 year, up 8 percent by volume and almost 30 percent by value on the previous year.
There is no industry-wide consensus on exactly what constitutes manuka honey, although producers and retailers can't make any therapeutic claims about the honey. The Ministry for Primary Industries working to come up with a formal definition and a method for identification. Although it isn't a food safety issue, MPI "takes concerns about the authenticity of New Zealand products very seriously and is acting to address these," according to its website.
Manuka Health holds the worldwide licence and pays royalties on sales to Kobe University of Medicine in Japan for the new technology, which combines encapsulated manuka honey with plant-derived cyclodextrin, "creating a free-flowing powder that can easily be added to foods and beverages for ease of delivery of health benefits," according to a report on the company's website.
"PEP have a reputation of growing companies," Paul said. "That's the same agenda for Manuka Health. This enable us as a company really accelerate our next stage of development. We've been around for nine years and grown the company. During that time we've created the potential to become a truly global natural healthcare company but to realise that we need an injection of capital.
"As a company we're in the process of building a global consumer brand and PEP have a track record in helping New Zealand companies achieve that," Paul said.
PEP has A$6 billion of funds equity funds under management, making it the largest private equity fund manager in Australasia, according to its website. PEP's other consumer product investments include Griffin's Foods, Tegel, Frucor and Peter's Ice Cream.