Wattle Hill increases bid for Capilano takeover
2 November 2018, Written by David Simmons
This morning, Australian honey producer Capilano went into a trading halt pending news of a completed takeover.
However, shortly after, the company left the halt to announce that the Wattle Hill and ROC Capital consortium has agreed to increase its takeover offer.
The China-focused private investors will now be paying $21 per share for the Capilano shares. Previously, the parties had agreed to a $20.06 per share payout.
This new agreement takes the takeover value of Capilano closer to $200 million. Previously, the deal was worth $190 million for the consortium.
Following approval of the deal by the Federal Court of Australia, Capilano has released a letter from an independent expert maintaining that the scheme is fair and reasonable and in the best interests of Capilano shareholders.
Capilano chairman Trevor Morgan says the new deal is an even better result for shareholders in the honey business.
"We are very pleased to be able to announce this increase to the Cash Consideration, which represents an even better deal for Capilano shareholders," says Morgan.
"The Capilano Directors unanimously recommend that Capilano Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal, and subject to the Independent Expert continuing to conclude that the Scheme is fair and reasonable, and in the best interests of, the Capilano Shareholders."
A spokesperson from the consortium says the increased offer was made to ensure sharheolders received appropriate value from their investment.
"The ROC / Wattle Hill consortium has increased its offer to provide the opportunity to all shareholders to achieve value at the current market price. This reflects our view of the strategic value of the business and the opportunities we can bring to it," says the consortium spokesperson.
"We are delighted that the Capilano board has reaffirmed its support for the offer. The improved offer price is a vote of confidence by the Consortium in the prospects of the company and its strategy, in contrast to the recent sentiment which appears to be driven by competing interests."
"As the consortium has stated all along, our aim is to enhance the position of Capilano's brands in key domestic markets as well as drive expansion of brands in offshore markets as a producer of premium Australian-sourced product, especially in China, the market with largest growth potential. The focus will also be on delivering innovative products with therapeutic and digestive health."
Shareholders now have until Monday, 5 November to determine whether they (if eligible) would like to apply for shares in HoldCo (the new entity to acquire 100 per cent of Capilano shares).
Capilano's shareholders will have the opportunity to vote on this new deal on Thursday, 15 November at the Scheme Meeting.
Once approved, 100 per cent of Capilano's shares will transfer to HoldCo on Wednesday, 5 December.
Over the last few months the transaction has been the subject of a variety of bewildering plays from shareholders.
After announcing the proposed takeover, controlling stakeholder Kerry Stokes increased his stake in the business to 21.7 per cent of voting power.
Bega Cheese also bought more of the company after the announcement, and now owns 5.76 per cent, which was indicative of a potential bidding war at the time.
In the background was an ongoing development regarding allegations made against Capilano that it was selling fake honey.
Capilano slammed media reports from the Sydney Morning Herald and the ABC that it may be unwittingly selling fake honey after nuclear magnetic resonance (NMR) testing revealed that Allowrie's Mixed Blossom Honey was 'adulterated' in a majority of samples.
However, as reported by The Australian, the SMH and the ABC failed to disclose a crucial fact; the law firm that commissioned the report on the fake honey was acting for Roc Partners and Wattle Hill. Once this conflict was revealed the law firm behind the report, King & Wood Mallesons, removed itself from acting for the bidders.
Shares in Capilano closed at $19.85 per share on Thursday 1 November.
Business News Australia
Author: David Simmons