Bega Cheese Abuzz for Takeover of Capilano Honey

Eli Green Blat

Bega Cheese executive chairman Barry Irvin has bought himself a seat at the table with billionaire Kerry Stokes and agriculture investor Albert Tse over the future of honey producer Capilano after the dairy group ratcheted up its stake to 8.4 per cent in preparation for a takeover battle.

Mr Irvin, whose Bega Cheese last year secured the local Mondelez food business for $460 million to gain control of its Vegemite and peanut butter brands, said honey was a natural fit with his company’s spreads and Bega had the infrastructure to operate supply chains from farmer to retailer.

He said he was not put off by reports that Capilano could be unwittingly selling “fake honey” to consumers, along with other producers allegedly using adulterated honey, arguing this was precisely the type of food security issue that Bega was focused on.

“What that news demonstrates is what we talk about a lot in terms of the strategy of Bega — that people are increasingly worrying about where their food comes from, who is producing it, how it’s produced, sustainability, who is handling it and delivering it to them,’’ Mr Irvin told The Australia n. “And again, I would say that news is what we are very tuned into.

“What those (honey) articles have demonstrated is the path we are trying to take all of our businesses on, what we see increasingly customers want both here and around the world.’’

Bega dealt itself a hand at any battle for Capilano after grabbing a stake in the listed honey producer last week. It was prompted into action last month when a joint bid by two private equity groups — Australian-Chinese private equity fund Wattle Hill, led by Mr Tse, and ROC Partners investment fund, backed by Australian superannuation groups — launched a $20.06-a-share bid for Capilano, valuing it at more than $190m. The well-connected Mr Tse is married to former prime minister Kevin Rudd’s daughter, Jessica, an entrepreneur and investor in her own right.

Capilano’s largest shareholder is Mr Stokes’s family office investment vehicle Australian Capital Equity, which owns a 20.6 per cent stake, and the media mogul’s investment arm has indicated it would not sell its shares into the offer but retain scrip in a new private honey company, and take a board seat.

“We have expressed for a while that we are into natural products that are delivered to the consumer and really what we would call our stock in trade,” Mr Irvin said.

“Around that we have supply chains that go right back to the farmer or grower and we control that supply chain as much as possible right through to the end customer. (Capilano Honey) is a product that fits with our  strategic approach.”

Leading the charge into Capilano’s share registry was corporate adviser David Williams and his Melbourne-based firm Kidder Williams, which has deep roots in the agricultural sector and has handled a number of high-profile deals recently.

Bottler Coca-Cola Amatil last month appointed Kidder Williams to advise it on the future of its struggling fruit cannery business SPC. It also advised on the $185m float of agricultural property investment group Vitalharvest.

Mr Williams has a long association with Bega, having advised on its sharemarket float in 2011 and last year’s $460m acquisition of the Mondelez food business.

Kidder Williams also spearheaded Bega’s grab of a strategic stake in then ASX-listed Warrnambool Cheese & Butter more than four years ago, with Bega  sitting through the ensuing takeover battle and, although losing out to successful bidder Saputo, Bega sold its shares for a $100m profit, which Mr Williams has  described as “not a bad consolation prize’’.

Mr Williams began buying shares in Capilano on behalf of Bega a few months ago, picking up stock for as low as $15.50 each and last Friday emerged with a stake of almost 6 per cent. Further buying has lifted Bega’s stake to 8.4 per cent this week.

The merchant banker secured the shares from fund managers who were happy to part with some of their holdings in the honey producer on the hopes it would give Bega enough momentum to trigger a takeover battle. However, Kidder Williams has made no promises in terms of Bega actually launching a takeover bid.

Mr Irvin said the takeover offer last month for Capilano pushed Bega to act and secure  itself a say in the future of the group. “A way of being involved in the conversation is to take a shareholding and that is what we have done,” he said.

“At this stage we haven’t made any decisions around making a bid or anything like that. We would … say we are happy to be able to have accumulated a bit of a shareholding but haven’t made decisions beyond that.’’…&FORM=EDGCTX&refig=c105aae130ad4bfabc3d7ea02461a799

ASX Release: Coca Cola Amatil | To Explore New Options for SPC

Coca-Cola Amatil has today announced the commencement of a strategic review of growth options for SPC – Australia’s leading processor of packaged fruit and vegetables.

Group Managing Director of Coca-Cola Amatil, Ms Alison Watkins, said the review coincides with completion of a four-year, $100 million co-investment in SPC in conjunction with the Victorian Government. Investment under this agreement was completed in June 2018 and included $22 million by the Victorian Government and $78 million by Coca-Cola Amatil.

“As we said at the time, without this investment the future of Australia’s best-loved packaged fruit and vegetable brands were in question,” Ms Watkins said.

“With this investment we kept SPC operating, invested in modernising the plant and created new business opportunities.

“These included new tomato and high-speed snack lines, a new aseptic fruit processing system and new export opportunities including China, all of which will support ongoing growth.

“The co-investment is complete, and now is the right time to consider options for the business.

“We believe there are many opportunities for growth in SPC, including new products and markets, further efficiency improvements, and technology and intellectual property. The review will look at how this growth could be unlocked, potentially through a change in ownership, alliances or mergers.

“Importantly, there are no plans to close SPC. We see a positive future for SPC as it continues to transform its operations.”

SPC is recognised as one of Australia’s most-loved brands, and is a household name in fruit, vegetables, baked beans and spaghetti. More recently, SPC expanded its range into specialised age-care products and premium sales in export markets.

Since acquiring SPC in 2005, Coca-Cola Amatil has invested around $250 million of capital in the business, including in technology and equipment.

Coca-Cola Amatil has engaged consultancy Kidder Williams to assist with the strategic review.

The review of SPC does not affect an ongoing sale process relating to Taylors and IXL brands, which was announced by SPC in early 2018.


Market doesn’t rate ‘Rate My Agent’ float

Myriam Robin

It was a disappointing ASX debut for David Williams-backed agent comparison website Rate My Agent whose $92 million ASX listing was worth just $75.4 million by close-of-trade.

Though Williams is still well in the money. He was one of the company’s earliest investors, having lobbed in $1 million in 2014, and now owns 27.6 per cent worth of some $20.8 million (around $5 million less than what it was valued at the start of trade).

Williams’ firm Kidder Williams received a fee of $800k for conducting the IPO, half paid in shares. Kidder Williams had also advised the company on a $5 million capital raise in 2016, and was paid in shares then too. The company as a whole was valued at $20 million at that point, so Williams’ stake has appreciated at least four-fold since 2016, even with today’s fall.

Not letting the disappointing first day’s trade dampen their spirits were the lawyers at MinterElIison, who advised on the float. ”This is a big step for RMA, with the IPO receiving overwhelming support from investors,” said MinterEllison lead partner Bart Oude-Vrielink in a congratulatory press release. Which is one way of framing an 18 per cent fall.

Other early investors in the company include stockbroker Dean Smorgon, scion of the Smorgon dynasty, and online entrepreneur Gabby Leibovich.

Investors Eye Costa Farms

Andrew Marshall

Investment fund managers are anticipating horticulture’s Costa family to list its farming properties in a $285 million real estate investment trust.

The farms supply the Australian Securities Exchange-listed Costa Group with raspberries, blueberries, blackberries, mandarins and oranges and are valued at about $285 million.

Costa family office chief executive officer Liza Whitmore and agribusiness investment adviser, David Williams, from Kidder Williams, reportedly met fund managers in Hong Kong last week to promote the REIT.

A product disclosure statement is expected to be lodged this week.