- Mediland Pharm (MPH) wants to broaden its horizons with a hotel purchase in New Zealand
- MPH wants to buy the Heartland Ambassador Hotel for $2.5 million by acquiring all of the shares in Ixora Investments
- It’s a bid which was prioritised by the company’s board, whose directors undertook “extensive due diligence” to recommend the buy
- As long as investors approve the buy, the business hopes to complete the acquisition by mid-January next year
- Because Mediland’s core business involves marketing luxury retail items to inbound Chinese tourists, this portfolio addition will provide another source of domestic income
- Today’s news failed to bring Mediland share into the green, however
- In mid-afternoon trade, shares were down 11 per cent, worth 8.9 cents each
Mediland Pharm (MPH) wants to broaden its horizons with a hotel purchase in New Zealand.
The health and wellbeing retailer currently operates retail spaces across Australia’s east coast and Auckland. It markets to both international and local customers, but admits COVID-19 has caused considerable headwinds as people stay home and shop online.
This new acquisition, however, would give Mediland access to New Zealand’s domestic tourism market and diversify its current revenue streams.
It’s a bid which was prioritised by the company’s board, whose directors undertook “extensive due diligence” to recommend the buy.
Essentially, MPH wants to buy the Heartland Ambassador Hotel by acquiring all of the shares in Ixora Investments. Interestingly, this business was only registered in 2016 to hold the Hamilton-based hotel.
The company wants to buy the Heartland for $2.5 million, a balance which excludes the hotel’s $2 million in debt. Colliers International carried out an independent assessment and valued the tourism play at $NZ5.8 million (approximately A$5.43 million).
Moving ahead, Mediland has reassured shareholders that the purchase structure can be customised so it doesn’t compromise the company’s cash position. As long as investors approve the buy, the business hopes to complete the acquisition by mid-January next year.
Because Mediland’s core business involves marketing luxury retail items to inbound Chinese tourists, this portfolio addition will provide another source of domestic income.
“Upon completion of the transaction, Mediland will own a hotel in New Zealand, which is not reliant on international tourists, and represents a solid revenue source which is not currently adversely affected by the COVID-19 pandemic,” Chair Dr Peter French stated.
“However, we do expect that it will also be well received by inbound Chinese customers when international borders re-open. We strongly recommend that our shareholders support this initiative,” he concluded.
Today’s news failed to bring Mediland share into the green, however. In mid afternoon trade, shares were down 11 per cent, worth 8.9 cents each.