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Shares in Longtable (ASX: LON) rose 36 per cent between in the lead-up to 28 February, right before a trading halt relating to its acquisition of Maggie Beer, a capital raise, and the group's 1H19 results. After the trading halt was lifted, shares fell back down to earth.
Premium food producer Longtable (ASX: LON) has had a rollercoaster of a week with the big announcement that it will acquire the rest of Maggie Beer Products (MBP) and its bumper $16 million capital raise for $0.20 a share.
The capital raising now on the cards is to fund the acquisition of the remaining 52 per cent of MPB not already owned, and provide working capital to support business growth.
Following the initial acquisition of 48 per cent of MBP in 2016, Longtable has gone on to acquire two other premium food brands: Paris Creek Farms in December 2017, and Saint David Dairy in 2018.
The company says it has a "clear" vision for its future which will include the continued growth of Saint David Dairy and the launch of new products in the wellness and nutrition space.
The $15.9 million raise will consist of an institutional placement of $2.18 million within the company's current 15 per cent placement capacity and a fully underwritten, non-renounceable rights issue to existing shareholders up to $13.71 million.
Approximately 10.9 million shares will be issued under the capital raising, representing 8.9 per cent of current shares on issue.
The capital raising will be conducted at $0.20 per new share, representing a 40 per cent discount to the last traded price on 27th February 2019. Shareholders appear to be cashing in on this discount by offloading shares en masse today.
As part of the total acquisition of MBP the company has announced that Maggie Beer will join the Longtable board and is committing to a two-year period as brand ambassador in addition to continuing her association with the brand, its product development program and customer relationships.
Since Longtable acquired their chunk of MBP the brand has performed well, encouraging Longtable to go all-in on the investment.
Maggie Beer delivered positive earnings of $1.5 million in earnings and a profit of $0.4 million in 1H19.
The success of the Maggie Beer brand contributed to Longtable's 1H19 results that were materially impacted by a busy year for the listed company.
The group achieved revenue of $11.1 million and incurred a loss after tax of $4.73 million.
Longtable attributed the loss to the acquisition of St David Dairy, the revitalisation of Paris Creek Farms' products and business model, and the successful turnaround of the Maggie Beer Products investment.
St David Dairy was a standout for Longtable, increasing its customer base by 27 per cent in Melbourne and Sydney and boosting sales by 31 per cent to $3.6 million.
Paris Creek Farms performed poorly thanks to a significant transformation of the brand led by Longtable. This transformation included a brand refresh, new packaging, a new national yogurt range, and raising prices across the product portfolio.
Shares in Longtable have dived 29.85 per cent to $0.24 per share at 2.28pm AEDT.
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