Comvita buys Timaru-based NZ Honey

Comvita products. File photo / APN

Natural health products company Comvita said it had agreed to buy Timaru-based NZ Honey from NZ Honey Producers Co-Operative in a cash and share deal worth $12.3 million.

Comvita shares jumped 8.8 per cent on the news this morning, gaining 28 cents to $3.48 and have declined 12 per cent this year.

The deal is conditional on the approval by special resolution of the shareholders of NZ Honey Producers Co-Operative.

Comvita, which specialises in making a range of manuka honey-based products, said the acquisition included land and honey processing assets in Timaru, honey inventory and a long term honey supply agreement with the co-operative.

NZ Honey makes and sells products under the Hollands Honey, 3 Bees and Sweet Meadow brrands and is one of the largest exporters of New Zealand honey products, with total sales in 2013 of $27.3 million.

The co-operative was established in 1981 and has grown to become one of the country's leading suppliers of honey products. It is owned by 70 beekeeper shareholders - most of them in the South Island.

Comvita chief executive Brett Hewlett said the acquisition would help to address the supply constraints that had challenged Comvita in recent years.

"We also gain valuable production capacity and additional company exposure in the South Island." he said in a statement. Comvita has previously sourced honey predominantly from the North Island.

Comvita said the $12.3 million purchase price was subject to a working capital adjustment. It comprised $7.3 million in cash and $5 million in Comvita shares issued at $3.50 per share.

The acquisition was expected to be earnings accretive per share for Comvita's shareholders and is anticipated to be completed mid-June.

Shares in Comvita last traded on the NZX on Wednesday at $3.20.

Read Comvita's full announcement here: