Thursday 29th June 2017
|Text too small?|
Trilogy International, the scented candle and beauty products maker grappling with rising raw material costs, will spend $13.8 million buying control of smaller rival Lanocorp's New Zealand and Australian businesses.
Auckland-based Trilogy will pay $12.5 million upfront in cash for 80 percent of Lanocorp New Zealand, whose suite of beauty products include Lanocreme, By Nature and Tiaki, with two further payments tied to earnings targets. It also has a call option to buy the remaining 20 percent after three, four or five years. Trilogy said it has also conditionally agreed to buy Lanocorp's affiliated Australian business for a further $1.3 million.
Christchurch-based Lanocorp "gives us geographic diversity with greater exposure to the US market and allows us to pursue products and channels outside the reach of our current portfolio," chairman Grant Baker said in a statement. "The acquisition provides further scale for TIL as we leverage our proven success with growing brands locally and in key international markets."
Trilogy lifted annual earnings 19 percent to $19.4 million in the year through March 31 with a full year's contribution from distributor CS & Co and stronger sales from its beauty product range offsetting more expensive raw materials. Those rising costs are expected to continue, although Trilogy has previously said it expected earnings to keep growing in the 2018 financial year.
The company today said it expects Lanocorp to boost earnings, showing up in the first-half and annual results for the year ending March 31, 2018. Lanocorp generated earnings before interest, tax, depreciation and amortisation of $2.4 million in the 12 months ended March 31, 2017, on revenue of $10.3 million.
Trilogy will fund the acquisition with existing banking facilities, having repaid $26.8 million of debt in the 2017 financial year. As at March 31, it had drawn down $7.6 million of a $21.5 million facility and another $18 million interest-only funding line was untouched at balance date.
Lanocorp managing director Tim McIver will stay on with the business and report to a Trilogy sub-board made up of directors Stephen Sinclair and Grant Baker and chief executive Angela Buglass. Companies Office documents show McIver is the controlling shareholder with 99 percent, held in a parcel with accountant Noel Watson. The rest of the shares are owned by Jerome and Suzanne Blakely.
Trilogy shares last traded at $2.05 and have dropped 32 percent so far this year.
No comments yet
NZ dollar stalls after Bascand's rate cut comments
Bascand says RBNZ will consider changing bank capital proposals
Affordable electricity key to decarbonisation - Genesis
Graeme Hart trims global packaging empire with US$615m asset sale
Stronger-than-expected inflation won't deter November rate cut - economists
Contact in talks on 13MW dairy boiler project
Restaurant Brands forecasts 10% growth in FY2020
Domestic inflation rises at fastest annual pace in eight years
16th October 2019 Morning Report
NZ dollar falls against British pound on Brexit hopes, CPI in focus