Comvita said it has acquired 20 per cent of Uruguay's Apiter for US$6.25 million and signed a long-term supply agreement to secure another source of propolis for sales into Asia.
The purchase price is comprised of US$5.65 million in cash and milestone earnouts and US$600,000 of Comvita shares, with settlement due on July 2, Te Puke-based Comvita said in a statement. Propolis is made by bees from plant resins to protect and sterilise their hives.
"We have always been supply-constrained for New Zealand sourced propolis," said chief executive Scott Coulter. "Together with a long-term supply agreement, the investment in Apiter removes our supply constraints for this key ingredient platform. Although this investment is not material from a group earnings perspective in the short term, it underpins our long-term strategy of this business segment.
"While relatively unknown in New Zealand, propolis and its health properties are well understood, with a high level of consumer awareness throughout many Asian markets," he said. "Particularly in China, we sell a large range of propolis capsules, tablets, soft gels, tinctures and toothpastes."
Last month Comvita said it had ended talks with a party that had been undertaking due diligence with the intention of making a full or partial takeover of the New Zealand company.
In April, the company slashed its forecast for after-tax operating profit to a range of $8 million-to-$11 million for the year ending June 30, down from an earlier forecast for earnings of more than $17.1 million due to the poor honey harvest.
Comvita shares fell 0.2 per cent to $5.73 and have gained 6 per cent in the past 12 months, lagging behind a 17 per cent gain in the S&P/NZX 50 Index.