New Zealand’s largest mānuka honey producer Comvita is eyeing a company sale, amid challenging times in the global honey sector.
The listed health and wellness company announced on the NZX on Monday morning that its board voted in favour of a bid by Florenz, a subsidiary of investment firm Masthead, to buy the struggling business that just celebrated 50 years in operation.
The bid would offer shareholders a cash price of $0.80 per share, representing an equity value of $56 million and an enterprise value of $119m.
The proposed sale would privatise the listed company.
The takeover offer came amid extremely challenging times for the company and the wider honey sector in recent years, as international customers stockpiled honey through the Covid-19 pandemic and became increasingly competitive on price.
In late July, producer King Honey, that was bought by wellness company Me Today in 2021 for $36m, was put into liquidation and receivership due to the global honey glut, among others.
Comvita’s performance was marred by recent losses, with the latest an after-tax loss of $77m for the 2024 financial year.
It expected to report a further significant loss this financial year next Friday. and while it earned modest profits of between $9m and $13m dollars in 2021 to 2023, it followed further losses in 2020 and 2019.
The company restructured, saving up to $15m through 2024/25 by reducing the headcount of its leadership and board of directors, staff by 67 people and closing offices.
But Comvita chairperson Bridget Coates said the efforts were not sufficient to strengthen the balance sheet for long-term sustainability.
“Comvita has faced ongoing pressure from structural changes in the mānuka honey sector, which continues to face oversupply, price and demand volatility and intense competition (including online),” she said in a statement.
“The environment is fragmented, with several participants under financial strain. Industry dynamics require consolidation at pace, but sector leadership demands capital strength, scale and speed, which are not available to Comvita under its current capital structure.”
Coates said the proposed sale would provide “certainty in a time of sustained challenges” in the mānuka honey sector.
She was meeting with shareholders on Monday, who must approve the sale proposal as well as the High Court and an independent advisor for the sale to proceed.
A management shake-up this time last year saw then chief executive and managing director David Banfield resign, with board chairman Brett Hewlett taking up his role in the interim, and independent director Bridget Coates appointed as chairperson.
Karl Gradon left Taupō-based milk processor Miraka to become chief executive at Comvita, effective from 1 August, just over two weeks before Monday’s announcement.
The company said shareholders China Resources Enterprise and Li Wang, who together owned approximately 18.3 percent of Comvita shares, supported the transaction.
Further details and analysis of the offer would be released to shareholders in October, ahead of the shareholder meeting in November. The new scheme would be implemented in December if all conditions were satisfied.
Florenz exported vitamins, supplements, pre-workouts, neutraceuticals and herbal remedies, and the company said in a statement the move to buy Comvita would create “the world’s largest seller of mānuka honey products.”
Owner Masthead’s chairman and Christchurch rich-lister Mark Stewart said the fundamentals of Comvita remained strong and it was committed to accelerating its growth.
“While Comvita has faced challenges in recent years, the fundamentals remain strong. We believe privatisation – enabling substantial debt repayment, an injection of world-class leadership capability, and a sharper focus on high-value product innovation – will deliver a new chapter of growth.”
One of its latest acquisitions was Wedderspoon Organic Group it bought last year, one of North America’s top-selling mānuka honey wellness brands with its range of honeys, lip balms and lozenges stocked in over 23,000 stores.
Florenz chief executive officer, Mike Tod said the combination of Comvita and Wedderspoon would create the scale and efficiencies needed to accelerate both brands globally.
“This acquisition will strengthen our ability to support global wellbeing through trusted, science-backed products,” he said.
“Comvita’s commitment to innovation, quality, and sustainability perfectly aligns with the values that guide our export growth strategy. We are proud to have the opportunity to keep this iconic company under New Zealand ownership.”
Comvita was co-founded in the mid-1970s by Alan Bougen and Claude Stratford in Bay of Plenty village Paengaroa and grew to become a leading mānuka honey and bee consumer products business.
The B Corp-certified company employed more than 400 people globally across Australia, China, North America, Southeast Asia and Europe, and had more than 1.6 billion bees.
rnz.co.nz
