Monday 17th June 2019
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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.
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