Trilogy's shares jump after $37 million purchase

42Below founder Geoff Ross is chairman of Trilogy. Photo / Dean Purcell

Trilogy International shares jumped to a record after the skincare products and scented candle maker agreed to buy privately held CS Company, New Zealand's largest independent importer and distributor of fragrances, cosmetics and toiletries, for $37 million in a debt-funded purchase.

The shares rose 17c to a record $1.57 during trading, before closing the day up 6c at $1.46.

Auckland-based Trilogy said it would pay $34 million in cash, plus $1.5 million on both the first and second anniversaries of the acquisition, and make additional payments on the third anniversary should the business meet profit targets for the 2016 and 2017 financial years.

At March 31, Trilogy's non-current interest-bearing liabilities were $1.6 million. The company's facility with the Bank of New Zealand had an upper limit of $9.5 million, according to Trilogy's annual report.

"To also have their bank's confidence to essentially fund it all with bank debt obviously shows the banks are relatively confident," said James Smalley, director at Hamilton Hindin Greene.

Meanwhile, falling interest rates also made it a good time to borrow money, Smalley said.

Trilogy, whose brands include skincare range Trilogy and home fragrance brand Ecoya, expects the additional earnings from CS will help fund its future expansion.

Business Bakery, which own 48 per cent of Trilogy, is the investment vehicle for 42Below Vodka founders and entrepreneurs Geoff Ross, Stephen Sinclair and Grant Baker which they used to underwrite Ecoya's $10.1 million IPO in 2010.

Ross is also chairman of Trilogy.

"You would think it's the Business Bakery and their contacts that have allowed them to get that type of funding and obviously their track record," Smalley said. "But it is a chunky buy for them, and I guess it's one of those ones, if it comes off it could really give them scale."