Angela Buglass, chief executive of Trilogy International Ltd.
Trilogy International, the scented candle and beauty products maker grappling with rising raw material costs, will spend $13.8 million buying control of smaller rival Lanocorp's New Zealand and Australian businesses.
Auckland-based Trilogy will pay $12.5m upfront in cash for 80 per cent of Lanocorp New Zealand, whose suite of beauty
products include Lanocreme, By Nature and Tiaki, with two further payments tied to earnings targets. It also has a call option to buy the remaining 20 per cent after three, four or five years. Trilogy said it has also conditionally agreed to buy Lanocorp's affiliated Australian business for a further $1.3m.
Christchurch-based Lanocorp "gives us geographic diversity with greater exposure to the US market and allows us to pursue products and channels outside the reach of our current portfolio," chairman Grant Baker said in a statement. "The acquisition provides further scale for TIL as we leverage our proven success with growing brands locally and in key international markets."
Trilogy lifted annual earnings 19 per cent to $19.4m in the year through March 31 with a full year's contribution from distributor CS & Co and stronger sales from its beauty product range offsetting more expensive raw materials. Those rising costs are expected to continue, although Trilogy has previously said it expected earnings to keep growing in the 2018 financial year.
The company today said it expects Lanocorp to boost earnings, showing up in the first-half and annual results for the year ending March 31, 2018. Lanocorp generated earnings before interest, tax, depreciation and amortisation of $2.4m in the 12 months ended March 31, 2017, on revenue of $10.3m.
