The Maggie Beer Holdings Ltd (ASX:MBH) share price will be one to watch after it announced a major new acquisition…
The post Maggie Beer (ASX:MBH) share price on watch after announcing major acquisition appeared first on The Motley Fool Australia. –
The Maggie Beer Holdings Ltd (ASX: MBH) share price will be one to watch when it returns from its trading halt.
This follows the announcement of a major acquisition and accompanying capital raising.
What did Maggie Beer announce?
This morning the premium food and beverage company announced an agreement to acquire Hampers & Gifts Australia.
According to the release, Hampers & Gifts Australia is the company behind the Hamper Emporium and Gifts Australia ecommerce businesses. These businesses are forecast to generate revenue of $36.4 million and EBITDA of approximately $9.1 million in FY 2021.
Management believes the acquisition fits strategically into its ecommerce and digital transformation strategy and expects it to be immediately earnings per share accretive. After which, synergies and growth initiatives are expected to deliver strong EBITDA growth in FY 2022.
What will it cost and how will it be funded?
The release explains that the two parties have agreed an acquisition price of $40 million, which will be split evenly between cash and shares.
The deal will also include a base earnout of $10 million. This will be paid subject to the new businesses achieving no less than $10 million in EBITDA for the financial year ending 30 June 2023. Once again, this will be split evenly between cash and shares.
In addition, the vendors will be entitled to an additional $1 million for every increase of $1 million in EBITDA (up to a maximum of $5 million) over and above the base earnout amount.
To fund the acquisition, Maggie Beer is aiming to raise $30 million via a capital raising at 35 cents per share. This represents a 4.1% discount to its last close price.
This will comprise a placement of $10.9 million and a pro rata accelerated, non-renounceable entitlement offer to raise approximately $19.1 million. The latter is intended to be fully underwritten.
Maggie Beer’s CEO, Chantale Millard, said: “It is a key strategy of the MBH Group to grow its e-commerce and direct to consumer business. This exciting opportunity will allow us to do this whilst partnering with a fantastic e-commerce hamper and gifting business, which has an amazing team and is very profitable and cash generating. It will help us transform the MBH Group and move it to its next level of growth.”
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
- Why AGL, Digital Wine, REA Group, & Xero shares are charging higher
- Why the CleanSpace (ASX:CSX) share price is diving 50%
- The Strategic Elements (ASX:SOR) share price is riding on its latest news
- Facebook poised to shoot 32% higher, says analyst
- ASX growth shares will be VERY slow to recover. Here’s why
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.