Nicholas Bolton's Keybridge becomes majority owner of Yowie

Nicholas Bolton's Keybridge becomes majority owner of Yowie

Photo: Yowie, via Facebook.

Despite a recommendation from the independent directors of confectionery company Yowie Group (ASX: YOW) that shareholders reject a $7.4 million off-market takeover offer from key investor Keybridge Capital (ASX: KBC), the suitor has successfully snapped up enough shares to tip its holding over the 50 per cent mark.

In a substantial holding notice released to the ASX today, Perth-based Yowie revealed that Keybridge, an investment group led by corporate raider Nicholas Bolton, acquired close to $1.1 million worth of shares on Friday.

This transaction, in addition to others since early March, took Keybridge's holding from 37.685 per cent up to 52.89 per cent.

As a result of this change in holding, Keybridge's takeover offer at 3.4 cents per share (cps) has been automatically extended by 14 days to 7pm, Melbourne time, on 26 April.

The offer itself is worth far less than the US$8.9 million ($13.7 million) in net assets Yowie reported for the end of 2023, of which US$4.53 million ($6.9 million) was in cash.

This represents a 5 per cent deterioration for the loss-making company's asset base in the space of six months - a change that an independent expert attributed to a reduction in net cash generated from operating activities, the acquisition of the Ernest Hillier business and assets, and the investment in inventory relating to seasonal products.

In Keybridge's bidder statement it told shareholders they had a choice between certain cash value for their Yowie shares, or the uncertainty of continuing to hold the securities.

However, independent directors not affiliated with Keybridge - executive chairman Sean Taylor and Scott Hobbs - unanimously urged shareholders to reject the offer following the findings of an independent expert's report prepared by Moore Australia Corporate Finance (WA) Pty Ltd.

The report determined the offer was "not fair but reasonable", and the directors claimed Keybridge was "attempting to increase its level of control over Yowie without paying a customary premium for control".

They also claimed the timing of the offer was opportunistic, coming at a time "when major initiatives and achievements in Yowie’s business have not yet had time to fully materialise in business growth and reported revenue".

Developments at the company, in addition to buying Ernest Hillier from administration, include rights deals to market its chocolate with such well-known brands as Bluey, the NRL and the AFL, while on Friday afternoon - the same day that Keybridge upped its stake - Yowie announced a licensing partnership with the North American National Basketball Association (NBA).

With minimum guaranteed licence fees payable of $2.5 million to the basketball league, Yowie will have the rights to develop, manufacture and sell confectionery lines containing NBA-themed Yowie toys in the USA, Australia and New Zealand through to 30 September 2026.

"The NBA is a truly elite sporting league with an unrivalled profile and global following, appealing to a younger audience. We’re delighted that the NBA has chosen to partner with Yowie for licensed confectionery in the USA, Australia and New Zealand markets," Yowie's chairman Sean Taylor said on Friday.

"The upcoming launch of NBA licensed confectionery during the 2024-25 NBA season will be high profile and significant for Yowie and for key retailers throughout the USA, Australia and NZ.

"We look forward to working with NBA and major retailers throughout the territory to deliver a high-quality innovative NBA Yowie product offer achieving sustainable success in the confectionery category beginning in the 2024-25 NBA season."

Taylor said Yowie would look to acquire relevant large-scale licenses both in Australia and globally to complement consumer and retailer demand.

"These licenses allow us to produce innovative small snack format treats for children that add value beyond that which is contained in the actual chocolate, like environmental awareness, family values and physical activity," he said.

Yowie Group’s first NBA licenced confectionery products will be available in early 2025.

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