Maggie Beer (ASX:MBH) share price on watch after announcing major acquisition

The Maggie Beer Holdings Ltd (ASX:MBH) share price will be one to watch after it announced a major new acquisition…

| More on:
The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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."

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.

More on Mergers & Acquisitions

two men shake hands on a deal.
Mergers & Acquisitions

Guess which ASX 300 stock is rocketing 23% on $1.1b takeover deal

This stock has accepted a takeover offer but it is a deep discount to its 52-week high.

Read more »

Two CEOs shaking hands on a deal.
Mergers & Acquisitions

Platinum shares drop despite L1 Capital merger agreement

These fund managers have agreed to merge their operations.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Mergers & Acquisitions

Guess which ASX 200 stock is jumping 9% on big news

Let's see why this stock is taking off this morning.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Technology Shares

Guess which ASX tech stock is racing higher on big news

This tech stock is making a key acquisition.

Read more »

Two brokers analysing stocks.
Energy Shares

Santos shares push higher on takeover update

What is the latest on this potential deal? Let's find out.

Read more »

A group of people gathered around a laptop computer with various expressions of interest, concern and surprise on their faces. All are wearing glasses.
Technology Shares

Guess which ASX 300 tech stock is making a 'cutting-edge' US$28m acquisition

What is this tech stock buying? Let's find out.

Read more »

Businessman cheering at desk with arms in the air
Technology Shares

Xero share price halted amid $3.9b game-changing US acquisition

The market darling is aiming to accelerate growth in the US with this major deal.

Read more »

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Which ASX All Ords stock is rocketing on takeover news?

This payments company has accepted a takeover offer.

Read more »