- Organic health and wellness company, Wattle Health (WHA) has failed to acquire a 75 per cent share in Blend & Pack (B&P) from Mason Dairy Holdings
- The proposed acquisition deal of B&P twice failed to get off the ground
- The bad news for Wattle shareholders is the loss of the promissory note offered as a deposit on the deal
- Mason will gain 17,750,302 fully paid Wattle shares, essentially for free
- The good news for shareholders is the Wattle rights issue has been cancelled, meaning current shareholdings won’t be further diluted
- The company reports that, despite the worldwide impacts of COVID-19, the company’s production, sales and supply chain remain unaffected so far
- Product sales and sales reach have increased through March
- Wattle Health has been in a voluntary trading suspension since October 2 2019. Shares were last listed at 53 cents each
Organic dairy product company Wattle Health (WHA) has failed in its bid to acquire a 75 per cent share in Blend & Pack (B&P) from Mason Dairy Holdings.
Despite the failure though – and the loss of its substantial deposit – the company’s outlook is remaining positive, even amid difficult market conditions.
The Deal with Mason
The proposed acquisition deal of B&P has twice failed to get off the ground. Hong Kong-based Mason first terminated a share purchase agreement in early March and has now rejected the new tender from Wattle, leaving the deal dead.
The bad news for Wattle shareholders is the loss of the promissory note offered as a deposit on the deal. Mason will gain 17,750,302 fully paid Wattle shares, essentially for free.
Wattle retains its 5 per cent stake in B&P, while Mason holds onto its 75 per cent stake. Wattle will continue to manufacture its products through the B&P facility.
The good news is that the Wattle rights issue – intended to raise $25 million via the issue of almost 100 million new shares – has been cancelled, meaning current shareholdings won’t be further diluted. Wattle is working with Computershare to refund all application monies to shareholders who subscribed under the rights issue.
Wattle is now in discussions with another interested party to piece together a funding package for the group.
Wattle advises its shares will remain in a voluntary suspension from trade until further details can be released. Those details are expected by April 7.
Got Milk?
While there may be no real silver lining with the death of the B&P deal, Wattle appears to be on a solid commercial footing, with an expansion in sales in recent months.
The company reports that, despite the worldwide impacts of COVID-19, the company’s production, sales and supply chain remain unaffected so far.
Wattle says it has implemented appropriate business continuity planning processes and there has been no significant disruption to ongoing business activity. It is also operating within government-designated safety protocols in the interests of the health and wellbeing of its staff.
In terms of sales, Wattle has actually had some big wins of late. Its Uganic infant formula range has been placed in over 400 Chemist Warehouse shopfronts through March.
The company also reports sales for both the Uganic formula range and its Little Innoscents range of health and skincare products were ahead of forecasts for the month as well.
Finally, Wattle also reports the construction work at the Corio Bay Dairy Group facility in Geelong is continuing and remains on schedule to commence operations in July.
While the company is realistic about the likelihood of possible delays due to COVID-19, progress is tracking well so far. With the completion of the new facility, Wattle will have made positive steps toward its ultimate goal of delivering Australia’s first vertically integrated organic dairy supply chain.
Wattle Health CEO Dr Tony McKenna says while it’s not all been smooth sailing, the company’s outlook remains positive.
“These have been challenging times for the WHA team, in particular, the Blend and Pack outcome,” he said.
“Despite this, we are determined to move forward, complete our nutritional spray dryer and get on with increasing sales of our organic product range,” he added.
Wattle Health has been in a voluntary trading suspension since October 2 2019. Shares were last listed at 53 cents each.