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China-focused consortium increases take-private bid for Capilano Honey

The Roc Capital and Wattle Hill vehicle raises its offer to A$21.00 per share for the Australian company amid speculation of a rival bid from listed dairy producer Bega Cheese.

A consortium consisting of Wattle Hill RHC Fund and Roc Capital has upped its bid for ASX-listed Capilano Honey, increasing its offer from A$20.06 ($14.44; €12.67) per share to A$21.00 per share.

Capilano Honey’s directors had accepted the previous offer from the consortium, known as Bravo HoldCo, in August and advised shareholders today to accept the new higher bid. Shareholders can take the cash consideration or accept a 1:1 swap for shares in the new private entity.

Capilano Honey chairman Trevor Morgan said in a statement to the ASX that the new offer represented “an even better deal for shareholders” and the company’s directors unanimously recommended shareholders vote in favor of the scheme “in the absence of a superior proposal”.

Market observers speculated that the consortium had increased its offer to ward off a mooted rival takeover bid by dairy giant Bega Cheese, also listed on the Australian stock exchange.

Bega Cheese began building its shareholding in Capilano Honey following the announcement of Bravo HoldCo’s offer in August and now owns more than 15 percent of the company’s shares.

Bega recently raised A$202 million through a share-purchase plan, partly to improve the company’s financial flexibility “to take advantage of future growth opportunities in dairy and food”, it said at the time, prompting speculation that it was considering a move for Capilano.

At the time of its original bid in August, Bravo HoldCo made clear its intention to target Asian markets, particularly China, with Capilano, as the honey producer has been trying to increase its exports of premium Australian honey.

Wattle Hill, one of the consortium partners, focuses on investments in Australian businesses that supply products and services in demand by Chinese consumers. Co-founder Albert Tse is the son-in-law of former Australian prime minister Kevin Rudd.

Roc Partners was established in June 2014 following the management buy-out of Macquarie Group’s private markets business unit by its senior executives. It owns a majority stake in Wagyu beef producer Stone Axe Pastoral Company and has invested in New South Wales oyster producer Oyster Coast.

Capilano Honey reported revenues of A$139 million and EBITDA of A$16.07 million in its full-year results to 30 June 2018. The company bills itself as the “largest supporter and purchaser” of Australian honey, purchasing 11,097 tons in the year to 30 June 2018, up 16 percent on the previous year.