Forbidden Foods buys Steve Smith’s Oat Milk Goodness for $3.4m

The $3.42 million scrip-based acquisition has been described by Forbidden Foods as a key opportunity to drive its path to profitability by merging the existing distribution channels for its Blue Dinosaur range of protein and healthy snack bars with those of Oat Milk Goodness.

“The proposed transaction represents a unique opportunity to leverage the respective strengths of both companies and create an integrated multi-channel, health-focused products business serving domestic and international markets,” says Forbidden Foods CEO Alex Aleksic.

“Strategically, the Forbidden Foods board and management team holds the view that OMG’s product suite specifically complements Forbidden Foods’ core range of Blue Dinosaur healthy snack foods, by adding a leading health-drink range in a fast-growing market.”

OMG was co-founded by Steve Smith, the cricket batting great and former Australian Test captain, along with Tony Adams and Daniel Rootes in 2019.

The company’s home-grown oat milk products are said to be free of industrial seed oils such as canola, rapeseed or sunflower oil which can cause inflammation.

After making inroads into the café sector, the OMG product range has been extended to include flavoured milks and “prOATein” options that are distributed through Woolworths supermarkets and Ampol Foodary outlets.

OMG’s annualised revenue is currently running at $1.2 million with Forbidden Foods forecasting “near-term revenue growth” following the acquisition.

“While there are a number of synergies between the businesses, OMG has the potential to benefit from the agreement through access to capital markets and international expansion opportunities,” says Smith, who sees the acquisition providing a “springboard” to grow the OMG business.

“I would like to take this opportunity to thank all shareholders, as well as key management for their support as we progress the business’ next phase of growth.”

Following extensive due diligence, the companies say they have identified synergy opportunities in sales and marketing, as well as the streamlining of overheads and internal administration costs to drive growth and cost efficiencies.

“With the completion of the SPA (share purchase agreement), we look forward to working with OMG and our shareholders to finalise the transaction and executing on our shared growth strategy,” says Aleksic.

“More broadly, this transaction marks the company’s maiden step in transitioning to a brand manager in the ‘better for you’ segment of the FMCG sector to further capitalise on the consumer shift towards healthy choices.

“The company is currently assessing a number of other value accretive opportunities and will provide further updates over the coming months.”

Forbidden Foods posted a net loss before tax of $1.085 million in the first half of FY24, a 104 per cent improvement on the previous corresponding period and the best earnings performance by the company since it listed on the ASX in September 2020.

After announcing its interim results in February, Forbidden Foods says the earnings provided a “very strong foundation” to “advance towards profitability in the coming months”.

While the domestic market has remained a key near-term focus for Forbidden Foods’ Blue Dinosaur range, the company earlier this year revealed it was actively expanding distribution points in the Asia-Pacific region as well as the US and Middle East.

OMG’s initial focus offshore is the India market where it believes it can leverage Smith’s profile in the cricket-loving country and take advantage of rising demand for health products.

In conjunction with the OMG acquisition, Forbidden Foods has raised $650,000 from professional and sophisticated investors via the issue of 54 million fully paid ordinary shares at 1.2c each – the same as the share purchase agreement with OMG.

Each of the shares has one free three-year option attached with an exercise price of 1.5c each.

Forbidden Foods shares were trading 7.7 per cent higher at 1.4c each at 1.03pm (AEST).