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Comvita avoids earnout on olive leaf purchase as sale growth misses target

Thursday 30th July 2009

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Comvita Ltd., which makes health products from honey and pollen, will avoid paying the ‘earnout’ component of the purchase price of an olive leaf extract business after it failed to meet a target for revenue growth.

The company had agreed to pay A$26 million in cash and stock for the unit of Olive Products Australia, of which A$6 million was dependent of revenue growth of 65% over the two years from date of purchase in 2007, it said in a statement.

Chief executive Brett Hewlett said while sales growth missed the target, the olive leaf business “been an excellent acquisition for Comvita and has exceeded our original forecast return on investment.”

“While sales revenue increased by a still outstanding 35%, the earnout target was not achieved and the earnout is not payable,” he said.

As a result, about 1.1 million shares held in escrow will be transferred back to Comvita and cancelled as has a bank guarantee for the A$3 million cash component.

Shares of Comvita were unchanged at 87 cents and have declined 57% in the past year. 

 

Businesswire.co.nz



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