Australia’s Yowie Group appears to be mulling a takeover approach from Keybridge Capital, the confectionery maker’s largest shareholder.

The Melbourne, Victoria-based investor made a so-called “off-market takeover offer” for publicly-listed Yowie last Friday (29 December), according to a filing from Keybridge Capital with the Australian Securities Exchange.

After acknowledging the approach last week with its own stock-exchange announcement, Yowie today (2 January) advised its remaining shareholders to “take no action” until the company’s board “makes a formal recommendation”.

Yowie’s most recent annual results show the business was loss-making in the year to 30 June to the tune of $102,947 US dollars. However, that did not prevent the company from paying A$375,000 ($254,029) last year for the assets of Australia-based chocolate producer Ernest Hillier, which went into voluntary administration in June 2023.

At the time, Yowie said the deal included a leased plant in Coburg North, along with all equipment, and the intellectual property related to the business name and brands of Ernest Hillier. Yowie added it would apply for a new facility lease and stressed the transaction did not include any “liabilities”.

Back in 2020, Keybridge Capital, which at the time owned around 23% of the shares, pressed for the appointment of a new board of directors at Yowie. Meanwhile, Mark Schuessler, the managing director and CEO, stepped down from those roles in July having been appointed in 2018.

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By GlobalData

Company chairman Sean Taylor signed off today’s no-action announcement following the Keybridge Capital offer of 3.4 Australian cents per ordinary share.

“Keybridge is making the offer in order to increase its ownership level in Yowie and thereby achieve greater influence over Yowie’s future strategy and direction,” the investor said in its filing last Friday.

“As a result of the offer, Yowie shareholders now have a choice between: certain cash value for their Yowie shares; or the uncertainty associated with a continued holding of Yowie shares”.

Keybridge Capital has submitted a bidders statement to the Australian Securities & Investments Commission outlining its intent. It said there is no “minimum acceptance condition” or other conditions attached to the offer.

The investor added that it has now instructed its broker – Ord Minnett – to “immediately commence purchasing Yowie shares on-market at or below the offer price (but reserves the right to withdraw those instructions at its discretion)”.

Yowie, headquartered in Perth in Western Australia, markets its namesake products in Australia and the US to “promote learning, understanding and engagement with the natural world”, featuring Yowie characters such as Rumble and Squish. It outsources production and distribution.

Revenue in the year to 30 June was $13.3m but was down 15% from the corresponding period.

Chairman Taylor said in the commentary: “With the increase in raw material cost, transport and logistics increasing and the higher cost of living driving revenues down, we delivered a less than acceptable result.

“To this end, we commissioned an extensive third-party productivity review in the hope of stemming cost increases and adding efficiencies to our production and cost base. This was a valuable exercise with several new ways of working introduced and a number to still implement.”