Comvita confident as bid loses sting

Comvita makes health and skin-care products out of ingredients such as Manuka honey. Photo / Supplied

The ball is in the court of Comvita to repay shareholder loyalty and deliver on forecasts with a takeover bid for the NZX-listed health and skin-care company due to close this week, says chairman Neil Craig.

Craig has written to shareholders affirming the prospects for the company, with a takeover offer by Singapore-listed Cerebos due to close on Thursday.

Cerebos is offering $2.50 each for all shares in Comvita - up to 60 per cent less than a $3.40 to $4 valuation by independent adviser Grant Samuel.

The independent directors of Comvita, known for its manuka honey products, advised shareholders to reject the bid and Cerebos has said it will not increase its offer.

Craig said that from the outset of the offer the board had stated its belief it undervalued the company by a considerable margin.

"We are pleased that this takeover offer is now effectively behind us," he said.

The independent valuation range did not fully reflect the potential and therefore the takeover value of Comvita, Craig said.

The company had come under intense scrutiny from Cerebos, other potential bidders and the independent adviser, he said.

"We believe we have come through this scrutiny in good shape."

Comvita's business model was the correct one and the envy of many exporters, Craig said.

"Our growth strategy, built on value-add product innovation, integrated and enhanced supply chain and control of our channels to market, is just starting to deliver significant and increasing returns to Comvita shareholders."

The company's prospects were strong, particularly in Asia, Craig said.

"We are well positioned in the fastest growing markets of Asia, where sales have grown from $7.4 million in 2006 to an expected $33 million this financial year."

Comvita's products worked well and were backed by spending on research into new and existing products, and the company had a robust manuka honey supply chain, he said.

The company was forecasting sales for the 12 months to March 31 next year of $91 million to $95 million and normalised profit of $7.3 million to $8.2 million.

Comvita had a strong and loyal shareholder base, Craig said.

"The ball is now in our court to repay the loyalty shown by [shareholders] and deliver on our forecasts."