Honey, we're off to China: Capilano taps into Asia health push
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Honey, we're off to China: Capilano taps into Asia health push

Australia's best-known honey brand Capilano is hoping to tap into the huge Chinese market after announcing a proposed $200 million deal with a private equity firm.

"We're at a stage where our business has been growing over recent years, and now the export markets that we're entering into, like China and so on, take a fair bit of investment," said Capilano managing director Ben McKee.

Dr McKee said while Capilano had decent market share in parts of Asia it was was yet to have "significant sales" in China.

Capilano Honey boss Ben McKee says the proposed deal to take the company private is a good deal for shareholders.

Capilano Honey boss Ben McKee says the proposed deal to take the company private is a good deal for shareholders.

"Getting our brand known and our history and our company and the quality of our products, and the therapeutic credentials of some of our products known in China, is going to take some investment. And I think China is a long-term market for us and needs to develop over time," he said.

He said private ownership was a better option for the Kerry Stokes-backed honey company than an ASX-listing after the company announced the deal with a company backed by Albert Tse's Sydney and Hong Kong-based outfit Wattle Hill and ROC Partners.

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Mr Tse, the founder of Wattle Hill, told Fairtfax Media Capilano had "super exciting" prospects in China and elsewhere in Asia. "Capilano has a range of premium brands that I think the Chinese and other Asian consumers would really be enjoying," he said.

"The focus will be on delivering innovative products with therapeutic and digestive health benefits in demand by Asian and Chinese consumers," Mr Tse said.

Capilano was formed in 1953 and was listed on the ASX in 2012, but now its shareholders will be pondering whether to back the private ownership move, and sell their stock at a significant premium to recent trading prices for the stock.

The offer price of $20.06 per share cash is an almost 30 per cent premium to the closing price on Friday of $15.65. There is a slight twist to the offer as well as the usual conditions around an independent expert report and a shareholder vote.

The bidders want shareholders representing at least 15 per cent of the company to receive scrip, and this should sail through though as the Stokes camp, which holds 20.6 per cent of the company, has indicated it wants to take scrip rather than cash.

"I think the privatised model for a company our size is more suited, than the current listed model. (Privatised) we can take long-term investments in markets and developing markets, rather than having our results analysed every six months," Dr McKee told Fairfax Media.

Most of Capilano's competitors were privately owned, he said, adding that he had spoken to beekeepers who liked the idea of being privatised.

I think the privatised model for a company our size is more suited, than the current listed model.

Dr Ben McKee, Capilano managing director

Michael Lukin, managing partner at Roc Partners, said his firm would raise funds from local super funds to backroll its section of the bid.

"What we're seeing is appetite for investment in high quality, high growth potential Australian agribusiness from our Australian superannuation fund clients. And in particular the opportunity to create export channels for these businesses and really leveraging our long term capital from these sources to help businesses like Capilano grow and develop their own markets and sales capability in places like China, the Middle East and the US," he said.

Shares in Capilano soared 25.4 per cent in the wake of the proposed deal, which is expected to be voted on by shareholders in November, to close at $19.62.

Darren is the mining and agribusiness reporter for The Age and The Sydney Morning Herald.

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