Comvita’s cornerstone shareholder backs Florenz bid

Alan Bougen holds a 3.38% stake in Comvita and is leading a group to form a competing bid. Photo / NZME

Comvita’s cornerstone shareholder has come out strongly in favour of a bid from Florenz and says a rival offer may damage the mānuka honey exporter’s brand.

Florenz – a unit of Christchurch-based Masthead, the investment vehicle of the Stewart family – is offering 80c a share via a scheme of arrangement, valuing the former high flyer at $56 million.

Comvita shares were trading at 78c this morning.

Added to the mix is a possible challenge to the scheme from co-founder and 3.36% shareholder Alan Bougen, who is leading a group to form a competing bid which, so far, has been light on detail.

A scheme-of-arrangement meeting for the Florenz offer is scheduled for this Friday.

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.

Wang, who is a New Zealand citizen, said in a statement the family did not believe the current management team could turn around the company’s performance.

“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,” she said.

“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,” Wang said.

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

“Any such actions like highly dilutive capital raising and/or high-interest subordinated debt, will be value-destructive for all existing shareholders, including myself,” she said.

Wang said she was “disturbed” to learn that a few shareholders and people formerly involved with Comvita have expressed negative views on the Florenz bid.

“I would encourage that they come up with a higher offer for all shareholders, instead of looking to take advantage of the situation at the expense of other shareholders and the company.”

Wang said the current board and management were “on a tight leash” from the company’s banking syndicate “after years of poor decision-making, profit downgrades [and] sales down while costly inventory piles up”.

In 2016, Bougen sold down his stake in the then high-flying company for just over $12m.

Wang said the company had been in a downward spiral since the sell-down.

She pointed out the board of Comvita unanimously supported the Florenz bid.

“There can be no question that in the absence of a superior offer the Florenz bid is the best opportunity shareholders have to recoup at least some of their investment,” Wang said.

Comvita was founded by the late Claude Stratford in 1974.

Bougen became Stratford’s business partner two years later.

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