Comvita to take full control of China JV
Honey company Comvita has entered a conditional agreement to acquire the remaining 49 percent of its China joint venture, Comvita Food and Comvita China, for about $20 million.
Comvita will acquire the JV by issuing 4.05 million new Comvita ordinary shares at $4.35 per share and an additional cash payment of $3.19 million. The acquisition will be earnings accretive immediately on a per share basis, it said.
“This completes the ‘final piece of the jigsaw’ with respect to our China Strategy, which we have been working on for a number of years," chief executive Scott Coulter said.
"This acquisition significantly strengthens our direct to China business, the key building block in our China strategic plan,” he added. The JV was created in July 2017 after a 12-year distribution relationship with the Chinese partners.
The shares will be issued into escrow today and held until all transaction conditions are satisfied. That is expected by the end of the month.
Li Wang, a New Zealand citizen, is a long-standing shareholder of Comvita and its largest. Her current shareholding represents almost 11.2 percent of the total Comvita shares on issue.
She and husband Guangping Zhu, the JV partners, will remain on the China board and Wang will be invited to stand for election to the Comvita board in October with the support of the board.
Post completion of this transaction, she will hold 18.41 percent of Comvita’s total shares on issue.
Comvita chair Neil Craig says the JV has revenues of about $55 million a year "so it is a sizeable business from Comvita’s perspective, and it is profitable and growing."
In the year to June 30, 2018, the venture had sales of $46 million and its 51 percent share of the JV had an after-tax profit of $3.3 million.
Comvita’s consolidated business, including China, is now expected to be greater than $200 million of sales on an annual basis.
Comvita shares were up 1.2 percent at $4.15 and have shed 15.5 percent so far this year.