Oliver Mander: NZ Shareholders Association spokesperson on honey giant Comvita being offered a takeover bid

Mānuka honey exporter Comvita has received a takeover offer from a subsidiary of Christchurch billionaire Mark Stewart’s Masthead Limited - Florenz.

It's offering 80 cents a share, equalling $56.4 million.

The offer has received unanimous support from Comvita’s board and its two largest shareholders, which own a combined 18.3 percent stake.

Oliver Mander from the NZ Shareholders Association explains what this could mean going forward.

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Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talk SEDB. Follow
this and our wide range of podcasts now on iHeartRadio.
Heather Dupless out, So, a.

Speaker 2 (00:18):
Business associated with billionaire Mark Stewart has made a takeover
offer for troubled honey exporter Convita. The offer is to
buy all of the shares for eighty cents each, that's
about fifty six point four million dollars in total. The
conveter boarder supporting the office, saying this is the best
way to get the business back on track. Oliver Amanda
is the CEO of the Shareholders Association and with us Hey, Oliver,
good evening, Heather, sounds like a good deal for shareholders.

Speaker 3 (00:41):
Do you agree, Well, it's a deal for shareholders. The
I mean, certainly it reflects is just how much has
changed to Convita over the past ten years. The share
price the business was ten years ago, it was probably
ten to twelve dollars thenk it picked at about twelve
dollars during twenty sixteen, and that just reflects what's happened

(01:02):
in the market since then. And you've seen this this
glut of Manuka honey honey flood the market that's packed
on margins more recently, that's the effected the company that's
probably really creating this type of outcome for shareholders because
it's probably says more about the company's debt levels than

(01:23):
it does about shareholders. Wow.

Speaker 2 (01:25):
Okay, So is that the fall from twelve dollars a
share down to about fifty cents? Is that mainly or
completely because of the flooding of alternatives into the market.

Speaker 3 (01:37):
Look, that's likely to be the case. Yeah, So you
saw that there's low barriers to entry into the market.
You've seen a glut of monoca honey producers and supplies.
We saw earlier this year we saw King Honey tipped
into liquidation, which was owned as a subsidiary by another
insittexlisted company. So yeah, that impacts obviously margins, but it

(02:00):
also meant that a lot of the supplies, like conveter
are carrying significant amounts of inventory and that stock that
that's going to be funded by some thing or someone,
And that meant that in Conveta's case, debt levels went
up as well. So you've got higher debt levels and
then that's compounded by reduced margins and losses, and all

(02:21):
of a sudden, some of those what are called bank
covenants started things that banks look at to make sure
their debts are safe, they start to look pretty shaky.
So the company has been working really hard recently to
try to stabilize the business, cut costs, cut inventary levels,
and negotiate with its banks in terms of saying, hey,

(02:42):
we need some relief here to get us through this
particular cycle. The board, they've obviously received this offer. I've
obviously felt that that was probably represents better when more
certain value now for shareholders compared to what the execution
risk might be in future.

Speaker 2 (02:58):
Is it just me? I mean, tell me if I'm
just if I'm imagining it, but it feels like there
have been quite a few takeover offers lately.

Speaker 3 (03:05):
You're not imagining it. And I think one interesting thing
for me is that whenever there's a takeover, of course
yet maybe it's good for shareholders, but actually that means
that someone else is seeing value in the business for
whatever reason.

Speaker 2 (03:17):
But it'sous.

Speaker 3 (03:19):
Sorry, Careen Marks Stewart owns another honey business. There's clearly
some synergy there that he's seeing in a you know,
by looking at the operations of these two businesses and
putting them together.

Speaker 2 (03:31):
Yeah, I mean, how do you feel about that though,
in terms of a business is being taken off the market.

Speaker 3 (03:36):
Well, we don't love it. And if there was a
pipeline of businesses coming into the market, we feel a
bit better about it. But ultimately takeover is the ultimate sanction.
You know, if a business isn't performing for whatever reason,
then actually or or the sentiment around it is poor,
the future outloka is poor, then obviously that does start
to attract interest. And yeah, there's been some probably it's

(03:59):
not just this year, of the last two to three years,
it's probably been heightened activity in our market. You know,
we've seen likes of pushpay Go, We've seen our Veda
group to see peer the currently I think Vital Technology
is a small Wellington based company. It's un to takeover
offer by Tate of christ Church. So yeah, look there's

(04:20):
there's it's ultimately the arbiter of shareholder value. So takeover
is definitely play a role market, a really important role.
But what's missing at the moment is that sort of
front end activity to bring companies into market. And we
think there's a lot more work required to get that
balance right between private and public and the regulations that
apply to each to make sure it's the level playing field.

Speaker 2 (04:41):
Oliver, while we've got you, how good is A two
looking at the moment?

Speaker 3 (04:46):
Well, yeah, AA two is that the poll are opposite
to what we've just described, certainly so today that they've
announced that the purchase of the Schelly milk plants at
Pocono two hundred nay two million dollars, and it's it's
kind of in an easier position that they're in a
good position to do this given the fact they have

(05:07):
one point one billion dollars of cash sitting on their
balance sheet, and that's up from nine hundred and seventy
odd million last year I think. So this is a
business that generates plenty of cash, but it has traditionally
been capital light, so they haven't invested much in plant
and equipment to support the sale of their product into China.

(05:28):
So this does mark a bit of a step change
for them. But had the investment in Matawa Valley Milk
in Southland for some time that is loss making. Now
this is still loss making, at least initially, so they're
relying on growing the throughput through the new plant they've purchased.
Through the it is a broad off as a broader
suite of products and output compared to Matawa of value milk,

(05:48):
and they're obviously banking on growing that to actually improve
the efficiency of the plant and the amount of products
that they can put through it. Good stuff.

Speaker 2 (05:56):
It's good to talk to you, Oliver. Really appreciate your expertise.
Oliver Amanda New Zealand Shareholders Association CEO's for.

Speaker 1 (06:03):
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