Wednesday 25 May 2016 09:55 AM
Comvita to beef up honey supply in new joint venture
By Sophie Boot
May 25 (BusinessDesk) - New Zealand manuka honey products maker Comvita is linking up with Blenheim-based apiary operator Putake Group to form a South Island-based honey business to meet global demand for manuka honey.
The companies have signed a memorandum of understanding to form a 50:50 joint venture, named Putake Group Holdings, which would develop a wholesale honey business in the South Island, Te Puke-based Comvita said in a statement. Putake owns 1,200 hives and manages another 2,800 hives through separate joint venture arrangements.
Comvita will pay for its involvement with $2 million in shares, based on a 20-day volume-weighted average price, which will be issued out of existing treasury stock. Settlement will occur on July 1. Comvita shares last traded at $12.80 and have risen 52 percent this year.
“Working with Putake will enable us to secure honey supply in the top half of the South Island as well as providing a platform for future growth," chief executive Scott Coulter said. "The JV will enable us to accelerate the development of a wholesale honey business in the South Island through speed of execution, immediate scale, finance and resourcing to secure supply."
Earlier this month, Comvita reported a 68 percent gain in annual profit to $17.2 million on revenue of $202 million as Australian sales soared, overtaking New Zealand as the company's largest market. Manuka honey accounts for about half of its sales while olive leaf extract makes up about 10 percent. It is aiming to deliver $400m of revenue by 2020.
Putake director Renee De Luca said the deal will align the apiary manager "with a business that has significant industry and market presence, scale and relationships."