TasFoods Limited's takeover of Betta Milk is set to go ahead after Betta shareholders approved the $11.2 million deal
Launceston-headquartered TasFoods told the ASX it had successfully completed due diligence to acquire Burnie-based Betta Milk's milk processing assets and brands.
TasFoods said it would launch a fully underwritten, non-renounceable rights issue at 12c per share on Thursday to raise about $8 million towards the deal (before costs and expenses).
TasFoods said Betta processed about 10 million litres of milk per year.
It had a 17 per cent share of Tasmanian fresh milk sales and a 37 per cent share of branded milk sales.
"The acquisition of Betta Milk's milk processing assets and brands will strengthen TasFoods' existing dairy business and is expected to lead to significant revenue opportunities and operational synergies," TasFoods said.
"The acquisition will add to TasFoods' expected positive EBITDA (earnings before interest, tax, depreciation and amortisation) from existing operations in financial year 2019."
TasFoods counts the calendar year as its financial year.
It said the Betta business in financial year 2019 was expected to have net sales of about $16.7 million and a normalised EBITDA of about $800,000 "before synergy benefits and growth opportunities are realised, excluding one-off integration costs".
TasFoods operates in the chicken, dairy and horticulture sectors and has signalled it is looking for another area of operations.
Its current businesses are Nichols Poultry, Shima Wasabi and the Robur Farm (goat), Pyengana and Meander Valley dairy operations.
Betta's Burnie processing facility was recently upgraded and is export accredited.
It also has distribution centres in Launceston and Hobart.
The rights issue is scheduled to open on July 1, with trading of the new shares scheduled to start on July 22.
Eligible shareholders will be offered one share for every 3.099 fully paid ordinary shares they hold as at 7pm on June 25.