Wattle Health Australia, an infant-formula and baby-food producer, has signed a share-purchase agreement to acquire a majority interest in Blend and Pack, an organic dairy business in Victoria.
Separately, the company said it has implemented a transition programme to strengthen its management team, and has nominated Dr Tony McKenna to take up the chief executive seat from 1 February to replace current CEO Lazarus Karasavvidis.
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The Sydney-listed business is putting down an up-front payment of US$30m to purchase an additional 75% of Blend and Pack based in the suburb of Hallam, Melbourne, from Mason Financial Holdings, taking its ownership to 80%. The deal also calls for a deferred payment of $25m over five years.
Blend and Pack, which has been operating since 2007, is licensed to export to China under the Certification and Accreditation Administration of the People’s Republic of China, commonly known as CNCA. Its blending and canning facility has the capacity to produce 20 million cans per year.
Wattle Health said in a filing with the Australian Securities Exchange it had entered an agreement to acquire the 75% in July but that has been terminated and replaced with a new arrangement on “more favourable financing terms”, which does not rely on debt finance.
To fund the initial payment, Wattle Health said it has launched a four for five non-renounceable rights issue at 40 Australian cents a share with an aim of raising AUD62.2m ($42.1m) before costs. It is seeking to raise a minimum of AUD55m.
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By GlobalDataWhile shareholders approved the proposed deal back in July, Wattle Health will seek new approvals because of the new financing structure.
On the CEO front, Wattle Health said it is proposed that McKenna will join the board once the deal has been completed as an executive director as “part of the transition” to chief executive and managing director of the group in February.
He has an impressive career history in the dairy industry having held various positions at Saputo, Bodco in New Zealand, Synlait Milk, Tatura Milk Industries and Fonterra, the world’s largest dairy cooperative.
