New Zealand-based but Australian-listed dairy manufacturer, Keytone Dairy (ASX: KTD) has agreed to buy Byron Bay contract dairy manufacturer, Omniblend for a minimum of $22.6 million.
In a deal which could be worth an additional $30 million to Omniblend should the business reach agreed milestones, Keytone will increase its production capacity by more than 5,000 tonnes a year and give it access to a wider customer group locally and in China.
Keytone is seeking to raise up to $18 million through a share placement to institutional investors and a share purchase plan to help acquire the business.
Keytone’s chairman, Peter James said the acquisition of Omniblend and its four Australian factories was compelling and transformational for the company.
James said: “Omniblend is a leading Australian manufacturer in the health and wellness sector, with both dry powder and ready to drink dairy based product capability.
“Keytone is fast tracking its development and the acquisition is underpinned by a strong strategic rationale.”
Omniblend should turn over $29.7 million with earnings of $2.2 million in the year to June 2019, however this will not stop Keytone from registering another small loss.
Omniblend sells product to a number of high profile third party customers such as Bellamays, OptiSlim, Craman’s and Aldi, and has a number of important accreditations including access to the China market. It recently launched its first proprietary products.
James said the acquisition gave Keytone significant advantages in China.
James said: “We believe that the combination of Keytone’s existing Asia and China sales channels, export-oriented brand and capital reserves, with Omniblend’s scale, breadth of product range, highly automated manufacturing facilities and proven customer relationships will provide substantial cross-sell synergies.”
The integrated company will initiate a step change in revenue and sales mix towards high value proprietary products, especially in the health and wellness sector.
Picture: Wikipedia Commons
Subscribe to our free @AuManufacturing newsletter here.