Early Comvita takeover vote shows Florenz bid unlikely to pass

Florenz's bid for Comvita looks to have already been defeated, going on early voting.

Proxy and electronic voting on Florenz’s 80c-a-share bid for Comvita looks to have been scuppered before tomorrow’s scheme-of-arrangement meeting on the takeover.

The mānuka honey exporter said in an update that, as of yesterday, 700 shareholders had lodged proxy instructions or postal/electronic votes, representing an aggregate of 80.3% of the 70.6 million votes exercisable.

Votes in favour of the proposal came to 53.7% of votes cast and 43.1% of total voting rights.

Votes against were 39.8% or 31.9% of total voting rights.

To be approved, the scheme needed to win 75% of votes cast by shareholders and more than 50% of the total votes attached to all Comvita shares.

“Based on these numbers, the scheme resolution would not pass, as greater than 25% of all shares have been voted, or are directed, against the scheme resolution,” Comvita said.

The company said it was important to note that these votes and directions remained subject to change by shareholders up until the scheme meeting, set down for 2pm.

“Until the process is formally concluded, Comvita urges shareholders and the market to note that the final outcome remains subject to completion of the voting process and court approval,” the company said.

Comvita’s cornerstone shareholder has come out strongly in favour of a bid from Florenz – a unit of Christchurch-based Masthead, the investment vehicle of the Stewart family. The Florenz offer values Comvita at $56 million.

Comvita shares last traded at 59c.

Co-founder and 3.36% shareholder Alan Bougen is leading a group to form a competing bid which, so far, has been light on detail.

The cornerstone shareholder, Li Wang, said her family were long-term supporters of Comvita, having established the market in China for the company.

The takeover tangle comes as the mānuka honey industry struggles with oversupply and aggressive discounting.

Comvita’s last result showed it sank deeper into the red with a loss of $104.8m from $77.4m a year earlier.

“Any delay to a resolution on Comvita’s ownership structure will irreplaceably damage the brand that has been built up over decades and put several hundred jobs at risk in New Zealand and overseas,” Wang said this week.

“I support the bid by Florenz as it offers the highest value for all shareholders at the moment and they have a solid track record to improve Comvita for the good of New Zealand and the mānuka honey industry, which relies on thriving international business,” she said.

“I would of course welcome any bona fide party that can come up with a higher offer,” Wang said.

“Should the current bid by Florenz fail, and no higher bid emerges, I believe the Comvita management and board will seek to conduct a highly dilutive capital raising and/or take on high-interest subordinated debt, which may further worsen the operating cashflow.”

Wang said the business falling into the hands of receivers was a “distinct possibility”, particularly if operations in China did not rapidly improve.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

• Listen and subscribe to the Today in Business podcast – the top headlines from the NZ Herald business team summarised and delivered by an artificial intelligence (AI) voice as an easily digestible recap.