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 (00:00):
Heather Duplessy out so, a business associated with billionaire Mark Stewart,
has made a takeover offer for troubled honey exporter Conveta.
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 offic 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

(00:23):
like a good deal for shareholders.

Speaker 2 (00:24):
Do you agree, Well, it's a deal for shareholders the
I mean, certainly. All it reflects is just how much
has changed a Convita over the past ten years. The
share price the business was ten years ago was probably
ten to twelve dollars. I think it picked at about
twelve dollars during twenty sixteen, and that just reflects what's

(00:45):
happened in the market since then. And you've seen this
this glut of Manuka honey honey flood the market that's
had an impact on margins. More recently that's 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

(01:06):
than it does about shareholders. Wow.

Speaker 1 (01:09):
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 2 (01:20):
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 glutt of monuca honey producers and supplies.
We saw earlier this year we saw King Honey tipped
into liquidation, which was owned as a subsidiary by another
INSITTEXL listed company. So yeah, that impacts obviously margins, but

(01:44):
it 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 something or someone, And
that meant that in Conveter'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. All of a sudden,

(02:05):
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, we need some relief here

(02:27):
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 and more certain value now for shareholders
compared to what the execution risk might be in future.
Is it just me?

Speaker 1 (02:43):
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 2 (02:48):
You're not imagining it, And I think the 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 1 (03:00):
But it's sorry, Caaren.

Speaker 2 (03:04):
Marks to it 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 1 (03:14):
Yeah, I mean, how do you feel about that though?
In terms of a business is being taken off the market.

Speaker 2 (03:20):
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 outlook is poor, then obviously that does start
to attract interest. And yeah, there's been some probably it's

(03:42):
not just this year, over 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 disappear. The currently I think Vital Technologies, a small
Wellington based company, it's t to takeover offer by Tate
of christ Church. So yeah, look, there's there's it's ultimately

(04:05):
the arbiter of shareholder value. So takeovers 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 1 (04:24):
Oliver, While we've got you, how good is a two
looking at the moment.

Speaker 2 (04:29):
Well, yeah, AA two is that the pole are opposite
to what we've just described, certainly so today that they've
announced that the purchase of the Sity milk plants at
Pocono Fo hundred nat to 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

(04:50):
have 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 it's 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. So this does mark a bit

(05:12):
of a step change for them. But had the investment
in Matawa of 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 and they're obviously

(05:32):
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 1 (05:40):
It's good to talk to you, Oliver. Really appreciate your expertise,
Oliver Amanda New Zealand Shareholders Association CEO.

Speaker 2 (05:46):
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