Consortium poised to take Capilano Honey private and push into China

Australia’s largest honey producer recommends Wattle Hill and Roc Capital’s joint bid, which values the company at $137m.

ASX-listed Capilano Honey has accepted a bid from Bravo HoldCo, a consortium consisting of Wattle Hill RHC Fund and Roc Capital, that will take the company private with a view to building its links with China.

Capilano’s board recommended shareholders vote in favour of an offer of either A$20.06 ($14.51; €12.79) cash per share or a 1:1 share swap in the new owner. The deal values Capilano Honey, Australia’s largest honey producer, at A$189.7 million.

The offer represents a premium of 28.2 percent to the last unaffected close of A$15.65 per share. Shares in the company stood at A$19.70 at close on 15 August.

The consortium made clear its intentions to target Asian markets, particularly in China, with Capilano, as the firm 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.

In a statement, Tse said: “Our key aim is to enhance the position of Capilano’s brands in key domestic markets as well as drive expansion of brands in offshore growth markets, such as China, as a producer of premium Australian-sourced product. The focus will be on delivering innovative products with therapeutic and digestive health benefits in demand by Asian and Chinese consumers.”

Michael Lukin, a partner at Roc Partners, confirmed that its equity investment would be sourced from its Australian superannuation fund clients, ensuring the firm will “remain majority Australian-owned”. Lukin also said beekeeper representation on the company’s board will be maintained.

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 recently invested in NSW 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 said it is the “largest supporter and purchaser” of Australian honey, purchasing 11,097 tons in the year to 30 June 2018, an increase of 16 percent on the previous year.

The company sources honey from more than 600 beekeeping families across Australia and exports to more than 30 countries worldwide, according to its website.