Investment firm Keybridge Capital (ASX: KBC) has launched an off-market takeover bid for Perth-based Yowie Group (ASX: YOW) in an effort to bail the struggling chocolate maker from continued financial losses.
Keybridge said it would bid for all the fully paid ordinary shares in Yowie for a consideration of $0.092 per share, representing a 31.4% premium to Yowie’s most recent closing share price of $0.07.
The company plans to increase its stake in Yowie to a level where it is able to exert “material influence” to drive a high-level review of the company and examine possible strategic directions to maximise Yowie’s available assets.
The proposed bid is for 100% of each Yowie shareholder’s fully paid ordinary shares and does not include an offer for outstanding options and performance or service rights issued by Yowie.
It would be subject to certain conditions relating to Yowie’s cash and liability balances and includes a clause for “no litigation or material adverse change” to the company before the end of the offer period.
The bid consideration would be paid in cash or a combination of cash and Keybridge’s listed Convertible Redeemable Promisory Notes, which are fixed term, convertible, redeemable and unsecured with a face value of $1.00 each and maturity date of 31 July 2020.
Keybridge currently holds 6.051% of Yowie’s shares directly and has a “relevant interest” in a further 12.182% of Yowie shares held by Aurora Funds Management Ltd.
Half year performance
The Yowie brand markets six chocolate characters to its consumer-base, in an effort to “promote learning, understanding and engagement of the natural world”.
In December, Yowie chairman Louis Carroll alluded to the company’s difficulties, saying its recent performance had been “well short of our expectations”.
“We are disappointed that an extremely competitive environment in the US has brought about this result,” he said.
“We are confident we can prosper in the US market, notwithstanding these challenging market conditions and we have clear strategies to improve our position and performance.”
The company posted a weak first-half 2018 operating cashflow of $209,000 with hopes of achieving profitable trading by the end of the financial year.
Yowie’s board of directors yesterday called Keybridge’s takeover bid an “unsolicited approach” which was “highly opportunistic”.
The board advised Yowie shareholders to take no action.