Keybridge Capital, an Australian investment firm, has resumed its takeover bid for Yowie Group, a confectionery company that produces chocolate products with animal-themed toys inside. The takeover bid, which was announced in late December 2023, was delayed due to an administrative oversight during the Christmas holiday period. However, Keybridge Capital has now received consent from the Australian Securities and Investments Commission (ASIC) to proceed with the offer, which values Yowie Group at 3.4 cents per share.
Keybridge Capital: A Major Shareholder and a Long-Time Suitor of Yowie Group
Keybridge Capital, which was founded in 1998, is an investment firm that focuses on debt, equity, and hybrid investments in various sectors, such as infrastructure, property, aviation, and mining. Keybridge Capital, which is listed on the Australian Securities Exchange (ASX), has a market capitalization of about $10 million.
Keybridge Capital is also a major shareholder and a long-time suitor of Yowie Group, which was founded in 1995 and is based in Perth, Western Australia. Yowie Group, which is also listed on the ASX, has a market capitalization of about $7 million. Yowie Group produces and sells chocolate products that contain animal-themed toys and educational materials, which aim to promote learning and conservation of wildlife and the environment.
Keybridge Capital currently owns 35.5 per cent of Yowie Group’s shares, making it the largest shareholder of the company. Keybridge Capital has been trying to acquire Yowie Group since 2019, when it made an initial offer of 9.2 cents per share, which was rejected by Yowie Group as undervaluing the company. Keybridge Capital then faced competition from another bidder, Aurora Dividend Income Trust (ADIT), which offered 9 cents per share, but also failed to secure the deal.
In December 2023, Keybridge Capital made a new offer of 3.4 cents per share, which represents a 17.24 per cent premium to the closing price of Yowie Group’s shares on the day before the offer, and a 9.68 per cent premium to the one-month volume weighted average price. Keybridge Capital said that it made the offer to increase its ownership level in Yowie Group and to have greater influence over its future strategy and direction.
Yowie Group: A Struggling Company with a Turbulent History
Yowie Group, which was named after a mythical creature in Australian folklore, was once a popular and successful brand, selling millions of chocolate products in Australia and overseas. Yowie Group had a licensing agreement with Cadbury, which helped it expand its distribution and reach. Yowie Group also had a loyal and engaged fan base, which collected and traded the animal-themed toys and learned about the wildlife and the environment.
However, Yowie Group’s fortunes changed in 2005, when Cadbury terminated the licensing agreement, citing declining sales and changing consumer preferences. Yowie Group then faced legal disputes with Cadbury over the ownership and use of the brand and the intellectual property. Yowie Group also faced financial difficulties and operational challenges, which forced it to discontinue its products and cease its operations.
In 2012, Yowie Group was revived by a group of investors in Perth, who bought the rights to the brand and the intellectual property from Cadbury, and relaunched the products in the US in 2014. Yowie Group then expanded its presence to other markets, such as Canada, New Zealand, and the UK, and introduced new products, such as Yowie Bites and Yowie Gummies. Yowie Group also partnered with various organizations, such as the Wildlife Conservation Society and the Rainforest Trust, to support their causes and initiatives.
However, Yowie Group’s revival was short-lived, as it faced new challenges and threats in the competitive and dynamic confectionery market. Yowie Group’s sales and profits declined, as it struggled to compete with other brands and products, such as Kinder Surprise and M&M’s. Yowie Group also faced governance and management issues, as it witnessed boardroom battles, shareholder disputes, and leadership changes. Yowie Group’s share price plummeted, as it lost the confidence and trust of its investors and customers.
The Takeover Bid: A Controversial and Uncertain Outcome
The takeover bid by Keybridge Capital has been controversial and uncertain, as it has faced opposition and criticism from various parties, including Yowie Group, its shareholders, and the regulators. Yowie Group has advised its shareholders to take no action on the offer, pending a formal recommendation from the independent board committee, which is expected to be released soon. Yowie Group has also questioned the credibility and intentions of Keybridge Capital, and has accused it of breaching the takeover rules and regulations.
Keybridge Capital has also faced scrutiny and intervention from the ASIC, which has raised several queries and concerns regarding the bidder’s statement and the offer documents. The ASIC has also ordered Keybridge Capital to sell some of its shares in Yowie Group, after finding that it had contravened the Corporations Act by acquiring more than 20 per cent of the voting power without making a takeover offer. The ASIC has also appointed Morgan Stanley Wealth Management Australia to sell the shares, which amount to 13 per cent of Yowie Group’s total capital.
The outcome of the takeover bid is still uncertain, as it depends on the response and reaction of the shareholders, the regulators, and the market. The offer is scheduled to close on March 2, 2024, unless extended or withdrawn. The offer is also subject to various conditions, such as a minimum acceptance of 50.1 per cent, no material adverse change, and no prescribed occurrences. The offer is also subject to the approval of the Foreign Investment Review Board, as Keybridge Capital is partly owned by foreign entities.