Capilano board sweet with $190m takeover bid

Capilano's $190m takeover set to open new export links with China


Kevin Rudd's family connections are behind the investor group bidding for Capilano's honey business


Australia’s best known honey brand, Capilano, is set to sell to a Chinese-Australian private equity group partnership for about $190 million.

The Brisbane-based former beekeeper co-operative, which listed its shares on the Australian Securities Exchange for about $2 each in 2012, will be sold for $20.06 a share if the deal is accepted by shareholders in November.

The takeover offer is led by former Prime Minister Kevin Rudd’s son-in-law, Albert Tse, whose $200m Wattle Hill private equity fund wants to expand Capilano’s export links with China.

Wattle Hill last year floated the organic baby food company, Bubs Australia, which has since branched into goat milk production and has a strong focus on Asia.

The consortium will bring added capability necessary to build our brands on a truly global scale - Ben McKee, Capilano

Capilano is already one of the world’s largest honey companies, sourcing supplies Australia-wide from more than 600 beekeeping families.

Premium price offer

Its range, which includes its Beeotic and Manuka honey brands, is exported to more than 30 countries.

The takeover offer – at a premium of almost 30 per cent on Capilano’s $15.65/share price on the  Australian Securities Exchange late last week – is unanimously supported by Capilano’s board of directors, unless any better deal emerges.

Existing shareholders will have the chance to stay as Capilano investors by swapping their current shares for equity in the new structure.

Managing director, Dr Ben McKee, himself from an apiary background in Victoria, said the bidding partnership understood the importance of Capilano’s beekeeper network and intended to invest further in the industry, also using its strong relationships in Asian markets to open new markets to Capilano Group’s premium and therapeutic honey brands.

“The consortium will bring added capability necessary to build our brands on a truly global scale,” he said.

The bidding group involves the two-year old private equity fund, Wattle Hill, and investment manager, Roc Partners.

Wattle Hill operates in Sydney, Hong Kong and Beijing and focuses on Australian business opportunities for its Chinese and Australian investors, with a particular interest in companies supplying products and services sought by Chinese consumers.

Capilano director and NSW apiarist, Phil McHugh, Loomberah.

Capilano director and NSW apiarist, Phil McHugh, Loomberah.

Roc Partners started as a private market business division at Macquarie Bank before being bought by its own management four years ago.

“We believe this agreement with Capilano is a compelling value proposition which will deliver immediate and significant value to Australian beekeepers,” said Roc’s managing partner, Michael Lukin.

“We look forward to working closely with Capilano’s management to further enhance the company’s sales, marketing and product development capabilities for the benefit of all stakeholders.”

Apiarist stays on board

He said apiarists would retain a strong voice at Capilano because consortium wanted beekeeper representation to continue on the board.

NSW apiarist and current beekeeper representative on the board, Phil McHugh, Loomberah, near Tamworth, was pleased the bidders had committed to supporting and promoting honey production and to driving market growth. 

“The consortium is quite conscious of the need to facilitate more training and bringing more people into the industry,” he said.

“Beekeeping and the honey industry in general is very much a long-term game, not something you learn in three or four years – it actually takes decades and a lot of hard work.”

Wattle Hill’s Brisbane-based principal Mr Tse, said the offer recognised Capilano’s strength and leading position in the marketplace and its strong record of earnings growth in the past six years.

“Capilano’s board and executive leadership are to be commended for creating the value reflected in the terms now agreed,” said Mr Tse, also a former Macquarie banker, who is married to Australian Agricultural Company director and successful Asian e-commerce business woman, Jessica Rudd.


Former Packer family adviser, Ashok Jacob, from Ellerston Capital, is an investment consultant to Wattle Hill, which manages funds from large European and Chinese insurance groups and private families.

Growth takes time, has risks

Although revenue lifted almost four per cent to $139m, Capilano posted a net profit after tax of $9.8m for 2017-18, down 4.9pc on the previous year.

Despite the impact drought was having on trees and groundcover vegetation and flowering activity to support bees in many parts of Australia, company chairman and South Australian apiarist, Trevor Morgan, said the business was positioned to deliver growth across its domestic and export markets.

However, but investing in premium and therapeutic brands and marketing into the Asian region would take time and involved execution risks.

“Therefore, we believe shareholders should have the opportunity to realise their Capilano shares in cash now,” he said.

He said directors carefully considered the benefits and disadvantages of the proposal and felt the cash option provided a certain cash outcome for shareholders for their shares at a premium price.

Major shareholder, the Kerry Stokes family-owned Wroxby Limited, which holds 20pc of Capilano shares, confirmed it will support the scheme implementation agreement and then take the share offer rather than payment.

The offer needs 75pc support from shareholders, of whom only about 10pc are honey suppliers to the business.

Board member and apiarist for 40 years, Mr McHugh felt the opportunity to de-list from the ASX would let Capilano focus on more longer term strategies rather than short timelines which dominated the quarterly and six-monthly results and reporting requirements of public companies.

“Beekeepers views of the proposal will vary, and some might be surprised about the prospect of becoming a private company given our strong share price performance on the ASX, but comments I’ve heard have been quite positive.” 

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