BUBS SHARES JUMP AS GROUP ACQUIRES GOAT MILK COMPANY
Written on the 3 November 2017 by David Simmons
SHARES in baby food manufacturer, Bubs Australia (ASX: BUB), have grown following the acquisition of goat milk supplier.
Bubs will acquire NuLac Foods, a major producer of goat milk powder, to become Australia's only vertically integrated producer of goat infant formula.
The deal, worth up to $39 million, sees Bubs acquire 100 per cent of NuLac, the owner of the CapriLac and Coach House Dairy brands and a 49.9 per cent equity interest in the dairy facilities producing NuLac Foods products.
The NuLac acquisition is contingent on shareholder approval, which will be sought at Bub's AGM in December.
Following the announcement, shares in Bubs Australia have jumped by 5.66 per cent, at 12pm AEST.
On completion of the acquisition, Bubs will acquire NuLac's sales and marketing functions, and IP and brands.
Chief Executive of Bubs Australia, Nicholas Simms, called the acquisition "transformative".
"This transformative acquisition is underpinned by a compelling rationale that would see Bubs controlling its own destiny," says Simms.
"This has been uppermost in our minds on our strategic journey and this transaction represents an important step in our efforts to expand our domestic and China business."
"The combines strength of the organisations will deliver a highly compelling proposition and accelerate our collective growth in our domestic markets, and in China and South East Asia."
NuLac's CapriLac is a market-leading brand of goat dairy products, including a range of goat's milk yoghurts, milk and milk powder, all made using milk from their farms in Gippsland, Victoria and Hamilton, New Zealand.
The acquisition also fits into Bubs Australia's Asian ambitions, according to Simms.
"The CapriLac brand has high appeal with Chinese consumers and brings opportunities to leverage existing Bubs relationships and agreements with e-commerce trading platforms with whom Bubs already has agreements," says Simms.
Business News Australia
Author: David Simmons