Sharechat Logo

Keytone Dairy to buy Australian Omniblend processor for A$22.4M

Monday 17th June 2019

Text too small?

ASX-listed Keytone Dairy, which owns a dairy factory in Christchurch, will pay A$22.4 million in cash, shares and assumed debt for Australian powder processor Omniblend. 

The acquisition builds on its A$15 million initial public offering last year, when it raised funds to expand on its New Zealand manufacturing base. Keytone chair Peter James said Omniblend will immediately add to earnings and provide greater scale and a deeper product offering. 

"We believe that the combination of Keytone's existing Asia and China sales channels, export-oriented brand and capital reserves, with Omniblend's scale, breadth of product range, highly automated manufacturing facilities and proven customer relationships will produce substantial cross-sell synergies," James said. 

Keytone will pay A$8 million in cash, issue A$10 million of shares at 43 cents each and will settle up to A$4.6 million of Omniblend's debt, it said in a statement. Up to A$30 million of stock will be issued to the vendors if earnings and revenue targets are met during the next three years. 

The dairy product manufacturer will raise up to A$8 million at 43 cents each in a placement to institutional and sophisticated investors and A$10 million via a share purchase plan to fund the cash component of the transaction. That's a discount to the 53 cents the shares closed at on Friday. 

Melbourne-based Omniblend was set up in 2008. It manufactures formula and blended powder products, and long-life UHT drinks specialising in the health and wellness sector. It has operations across four sites and employees 84 people. 

Omniblend is expected to generate a profit of A$900,000 on revenue of A$29.7 million in the year ending June 30, whereas Keytone reported a loss of A$1.5 million on revenue of A$2.7 million in the year ended March.

On a pro-forma basis, the enlarged entity is expected to generate annual revenue of A$32.4 million, underlying earnings before interest, tax, depreciation and amortisation of A$800,000 and a net loss of A$200,000 before any duplication is removed or synergies achieved. 

Keytone said construction of a second plant in Christchurch is on track to be completed this calendar year and will lift production to 5,000 tonnes from 1,500 tonnes. 

(BusinessDesk)

Father's Day SOON! Crazy Deals on ALL IRG Yearbooks - More than 50% OFF - $19.99 for 44th IRG Yearbook 2018-2019


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar rises after Orr talks up the economy
Comvita posts $27.7m net loss on goodwill write-downs
Buyers emerge for Denton Morrell client book
WEL reviewing capital structure of fibre business
Cavalier announces strategic collaboration with NZ Merino Company
Delegat continues to invest after record year
Kiwibank's annual profit eases as fee income drops
TIL lifts operating earnings, watching for slowdown
Vector profit slides 44% on struggling HRV writedown
Steel & Tube returns to the black but says margins are squeezed

IRG See IRG research reports