KEY POINTS:
Honey products company Comvita said today it was buying Australia's Olive Products Australia Pty (OPA) for A$20 million ($23.7 million).
The purchase will be mainly paid for via the issue of new shares.
Up to A$6m extra may be paid from an earnout agreement if growth targets are met.
Of the total A$26m, A$5.2m will be in the form of Comvita shares.
Comvita will partially fund the acquisition through share placement to institutions and habitual investors of up to $12m at $2.80 per share -- a 15 per cent discount to their last traded price of $3.30.
The shares were suspended until Friday when the placement is due to be completed.
The placement is underwritten to $8 million.
Following the placement, Comvita will offer existing shareholders the chance to subscribe for up to $5000 worth of shares at the $2.80 price.
The purchase is subject to shareholder approval, final due diligence and finance.
OPA is a vertically integrated business founded by Australian natural health enthusiast Ray Archer.
The acquisition includes a "super-intensive" 500,000 olive tree grove on a 162ha plantation.
These trees have been chosen by the Archers over many years of research to maximise the production of their therapeutically active compounds, Comvita ceo Brett Hewlett said.
OPA had shown compound annual growth of more than 50 per cent over the past five years and was "very profitable", he said.
The acquisition was made through a non-contestable process.
The Archers felt that Comvita was the right party to take the business forward and grow it internationally using Comvita's access to key markets throughout Asia and Europe, Mr Hewlett said.
This is Comvita's third acquisition this year.
The full benefits of these would not be felt until the next financial year, he said.
The company forecast net profit after tax in the year to March 2009 (the next full financial year given Comvita's change in balance date) to be $5.2m (or 18.7 cents per share).
Earnings before interest, tax, depreciation and amortisation are projected to be $12.4m.
Mr Hewlett said Comvita's strategy was to focus on acquisitions, to gain a leadership position in woundcare and secure distribution strength in Europe and Asia.
"OPA is a major step to obtaining diversification in our supply base, a stated strategic goal for Comvita."
Mr Hewlett said the acquisition would boost earnings for all shareholders inclusive of the additional equity raised.
Comvita technical general manager Ralph Schlothauer said there was a lot of interest in olive leaf extracts, particularly oleuropein.
Australia's Therapeutic Goods Administration had approved a heart health claim for that product.
Anecdotal reports from consumers indicated they were getting relief for joint pain and arthritis after they have taken OPA's products, he said.
Comvita shares have risen from $2.90 in July 2006.
- NZPA
