Asian private equity funds back $20-per-share bid for Capilano Honey
A Chinese-backed private equity fund and a local outfit have lobbed a $20.06 per share cash offer for Capilano Honey.
Capilano (ASX:CZZ) has signed a deal with Bravo HoldCo, which has made the bid and is owned by Wattle Hill RHC Fund 1, backed by a big China’s insurance group Sunshine Insurance Group and former Macquarie Bank private markets business unit ROC Partners.
The bid was 28 per cent higher than Capilano’s closing price on Friday, at $15.65.
The shares leapt 27 per cent on Monday morning to $19.80, however.
Shareholders can also elect to remain owners of the new company.
Shareholders can also take up a scrip alternative with a one-for-one share swap. They can also choose to buy extra shares in the new private company at a rate of 0.5 shares in the new entity for every one Capilano share they own.
Major shareholder Wroxby, which owns 20.6 per cent of the honey maker, says it’ll accept in the absence of a better deal.
The plan will only go ahead if shareholders representing 15 per cent or more of the investor base agree.
The Capilano board is recommending the deal pending an independent expert opinion, unless a better deal comes along.
A spokesman for Capilano told Stockhead they expect the independent expert report to be finished by October and the deal to be completed by early December.
He said the consortium approached Capilano “a couple of weeks ago”.
Chairman Trevor Morgan says moving into Asia and developing premium brands will take money, which the company’s prospective bakers can provide, and also pose execution risks.
“Therefore, we believe shareholders should have the opportunity to realise their Capilano shares in cash now,” he said.
“The consortium will bring added capability necessary to build our brands on a truly global scale. In particular Wattle Hill’s strong relationships in Asian markets provides an opportunity to unlock the potential of Capilano Group’s premium and therapeutic brands,” said managing director Dr Ben McKee.
Wattle Hill spokesman Albert Tse says they plan to build the Capilano brand in Australia but also to take it offshore particularly to China.
“The focus will be on delivering innovative products with therapeutic and digestive health benefits in demand by Asian and Chinese consumers,” he said.
The honey maker had just announced a profit fall of 4.9 per cent to $9.8 million.
Revenue grew however by 4 per cent to $138 million.
“The company has endured a number of years where sales expansion and opportunities were often hampered or restricted by the limited availability of quality Australian honey, leaving us with the only avenue for growth being to achieve better margins on the sales we make and to develop new higher margin products,” Mr Morgan said in the annual report.
“Though our team have been very successful at doing that, it is now very exciting to see the plans our expanded sales and marketing team are currently developing to take advantage of the extra Australian honey currently available to grow markets both locally and overseas.”