Comvita Takeover Bid Fails

Comvita’s shareholders have denied the wishes of both their board and biggest shareholders to vote down the takeover bid of Florenz and one of New Zealand’s wealthiest people, Mark Stewart, in a decision that pushes New Zealand’s largest honey company closer to receivership. Now, with their plan-A shot down by enough of the collective ownership, Comvita’s board will undergo urgent refinancing discussions as a huge weight of debt remains firmly around the company’s neck.

By Patrick Dawkins

“To agree to sell and lose more than two thirds of what I paid for my shares, I would rather lose the rest of it and have a chance to recapitalise the company and make a go of it,” said one long-time Comvita shareholder from the floor of the November 14 Scheme Resolution meeting in Auckland.

Each shareholder will have their own reasons for voting the way they did, but that ‘in too deep’ sentiment appears to have shaped the thinking of some.

Comvita board chair Bridget Coates addresses shareholders in Auckland on November 14, watched on by, from left, CEO Karl Gradon and fellow director and chair of audit and risk Michael Sang

“We have a billionaire in the South Island who would like to take over the company, but the price was, how should I say? Laughable,” another added their thoughts to the meeting.

Full and final results of the vote regarding Florenz’s NZc80 a share takeover offer are expected to be announced to the NZX on Monday November 17. A 75% threshold of support is required to pass the company into Florenz’s ownership. At the time of the meeting only 53.7% of the shareholding was in favour of the sale though. Therefore, Comvita board chair Bridget Coates – who led support for the scheme – admitted defeat at the Friday meeting.

“We have notified our banking syndicate that, based on the information before us, the vote is likely not to succeed and we have requested their further support to provide time to recapitalise the business in a way that secures their long-term support and financial viability of the business for all of us shareholders,” Coates said.

A 71 Million Dollar Weight Around the Neck

Incumbered with NZD71.3m in debt as reported in their FY2025 results, and banks running out of patience with their inability to repay, recapitalisation is critical.

“The board’s focus now turns to advancing the recapitalisation process. We appreciate the support of our banking syndicate and we acknowledge their repeated wave of covenants as the company seeks to stabilise itself,” Coates told the meeting.

In simple terms, covenant waving refers to banks overlooking repayment obligations.

The results of the Scheme Implementation vote, as at November 14 and presented to shareholders, regarding Florenz’s takeover bid of Comvita.

The board chair advised shareholders that even prior to the vote “contingency, plan-B” planning had begun and the board have been “working closely with its advisors and banking partners to evaluate a wide range of funding alternatives”.

“This work is progressing with urgency and discipline to ensure a solution which stabilises the business and positions it to grow again and reduces ongoing risk to our shareholders. It is the board’s highest priority.

“The board’s current intent is to assess options to recapitalise the company and ensure the path we take is fair to all shareholders,” Coates said.

Recapitalisation could prove troublesome though according to Central Otago beekeeper and retired accountant Russell Marsh.

“I think most people in the industry would say the assets are over-valued, and have been for a while, so that is a reason the banks are not as keen as they were, because Comvita’s security is not necessarily intact,” Marsh explains.

Comvita has undertaken NZD118.1m in asset write-downs across FY2024 and 2025 (as detailed in Comvita & the Bonfire of Shareholder Equity).

With NZD71.3m in bank debt, and losses piling up, Comvita is at risk of entering receivership if results can’t be turned around.

Still Share-ing

Florenz is a natural health products company whose majority shareholder is Masthead Ltd., the family investment company of rich-lister Mark Stewart. Florenz already owns Wedderspoon Organic NZ, a major seller of mānuka honey to the USA. The acquisition of Comvita, if successful, would have brought a company with well-established distribution to China under Florenz’s control.

Florenz chairman and majority shareholder Mark Stewart has seen his NZc80 a share offer to Comvita fail to gain sufficient support from shareholders, despite board approval.

A Florenz takeover would have removed New Zealand’s only listed mānuka honey company of significance from the stock exchange.

“It is a good thing for our industry that we have a player on the stock market as it provides some transparency for our industry. Most beekeepers keep their info to themselves,” Marsh says.

The former accountant and third-generation beekeeper says he is surprised shareholders rejected the offer, which was first announced on August 17 when Comvita’s listed price was just NZDc47.

“Are the shareholders waiting for the person who offered 80 cents to come back with a better offer? I don’t know. It is hard to forecast a significant uplift in profitability at the moment …to recover to 80 cents on their own, it wasn’t looking likely,” Marsh says.

Confidence Levels

One shareholder who has little confidence in Comvita’s leaders to right the stricken vessel is Li Wang, who at 12% has the largest ownership stake. Just days out from the November 14 meeting, Wang released a statement backing the takeover bid which “offers the highest value for all shareholders at the moment and they (Florenz) have a solid track record to improve Comvita for the good of New Zealand and the manuka honey industry…”.

Comvita has been publicly listed on the NZX since 2003 and, while on shaky financial ground, it will continue to be publicly traded after a takeover bid was denied by shareholders.

“My family are long term supporters of Comvita and also established the China market for Comvita. We do not believe the current management team can turn around the company’s performance. Any delay to a resolution on Comvita’s ownership structure will irreplaceably damage the brand that has been built up over decades and put several hundred jobs at risk in New Zealand and overseas,” Wang riled.

The cornerstone shareholder warned that, should the Florenz bid fail and no higher bid emerge she believed Comvita would “seek to conduct a highly dilutive capital raising and/or take on high interest subordinated debt, which may further worsen the operating cash flow”.

“The business falling into the hands of receivers is a distinct possibility, particularly if the business in China does not rapidly improve,” Wang stated.

With shareholders – albeit a minority – voting to maintain their control, former Comvita director, board chair and most-recently the acting chief executive who departed in August, Brett Hewlett was wearing rose-tinted glasses following the meeting.

“I am very, very pleased,” Hewlett said.

“I see this as a vote of support and a vote of confidence in the current management and leadership under Karl Gradon as CEO. I wish them the very best and hope they can turn it around.”

For the Best…

And Comvita “turning it around” is in the best interest of New Zealand Beekeepers says one of New Zealand’s largest and longer-serving apiarists, Tweeddale’s Honey owner Don Tweeddale.

“I hope they survive and I hope they do well, because they are the ones that have kept the price and the profile of mānuka up for decades. They are leaders in promotion of the product. Seeing them being undercut and losing their market is very depressing news,” Tweeddale, owner of some 19,000 hives around the North Island says.

“Without them leading the charge and lifting the profile, mānuka never would have got to the price it did over the last 20 years.”

Coates called Comvita “a special company with a proud legacy” and admitted to shareholders that, while she and the board wanted the vote to go the other way, “it is your company and ultimately our shareholders determine its future”.

Maybe so, but for how long? Their decision to deny Florenz and Mark Stewart risks soon rendering them with both no control and an equal amount of share value.

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ADDITIONAL REPORT

This Was Not a Drill

Bruce Roscoe alerted our readers to the prospect of a takeover of Comvita in his article The Vulnerability of Comvita which appeared in our October 2024 content. Here he sketches possible scenarios by which Comvita survives or folds.

By Bruce Roscoe

The failed Florenz NZc80 per share takeover bid does not mean Comvita no longer faces the prospect of a takeover. As a distressed company which has repeatedly warned of receivership or voluntary administration, Comvita conversely all but advertises that it remains for sale.

Comvita board Chair Bridget Coates addresses shareholders at the November 14 meeting in Auckland, a fateful occasion for New Zealand's flagship manuka honey seller.

The vulnerability to takeover stems from the absence of a cornerstone shareholding of size. As at 4 February 2005, Comvita’s largest shareholder was A Bougen (and related) with a holding of 21.4%. That holding had reduced to 3.4% as at 30 June 2025.  

Shareholders who anticipated that the takeover vote would fail began bailing out on 11 November. By market close on 14 November — the day of the shareholder meeting — Comvita’s share price had shed 32.1% to NZc53. No floor is seen below, and the shares now appear as safe a haven as the eye of a southern storm.

A patient raider can wait and mop up shares of sellers who choose to cut their enlarged losses, with the aim of launching a hostile bid, reaching a 51% holding, and replacing Comvita’s management. Florenz was gentlemanly by comparison, electing the 75% approval threshold that would have bestowed a mandate for changed ownership and full control.

Companies typically finance through debt or equity or a combination of both. Comvita seems no longer able to finance through bank debt. Nor would it appear able to pay the high coupon or interest that would be demanded of a distressed issuer of debt sold directly to investors in the form of a bond.

That leaves equity, which means an issue of new shares and possibly also share-linked instruments such as rights and warrants, which usually is the most expensive form of financing and suited to good times. An investment bank would pocket 5%-8% of the value of the issue, in addition to charging sundry fees.   

By 1 March 2026, Comvita’s banks are due repayment of NZD54m, an amount 44.4% greater than the company’s current NZD37.4m stock market value. Without including any funds for working capital, therefore, Comvita would need to issue 102m shares at the current price to repay banks. Currently 70.6m shares are in issue. Existing shareholders, to avoid dilution of their holdings by 59.1%, would need to stump up cash for rights, if such were offered.

Comvita's FY2025 results, showing a NZD105m loss.

The clear and full explanation of the rationale underlying the Florenz proposal that Comvita detailed in documents released since 18 August and the concluding shareholder vote were not stages in a drill. The perhaps fateful implications of the vote result appeared etched in chair Bridget Coates’ face in alternating expressions of fear and resignation throughout the meeting.       

The Cost of Uncertainty

While under possible threat of takeover and at the same time in likely preparation for a mammoth issue of new equity, debilitating professional fees can be expected to mount. In the year ended 30 June, auditor KPMG’s fees nearly doubled to NZD1.12m from the NZD590 thousand the year before, and “Other legal and professional fees” doubled to NZD1.24m from NZD612 thousand.

There is a secondary cost to uncertainty. Recapitalisation of Comvita will consume large amounts of senior management time when all hands are needed on deck to right the listing ship. Such distraction from the basic business now enters its third year. Preparations for the scenario that has actually unfolded began two years ago, chair Coates revealed in her letter that accompanied the notice of 14 October. 

Price Erosion in Key Markets  

Pricing in export markets for Comvita’s anchor product, retail pack monofloral mānuka honey, continues to weaken. The NZ dollar-per-kilogram export price in this category for all markets in January-September declined 9.7% to NZD49.46, compared with the same period in 2024. The declines for Comvita’s two major single-country markets — China and the US — were 13.4% to NZD51.7/kg and 6.0% to NZD41.1/kg.

Bulk monofloral mānuka honey exports, which are packed offshore by brands that compete with Comvita and other New Zealand brands, continue to surge. The total jumped 17.6% in the period to 1,237.2 tonnes on a per-kg price decline of 10.5% to NZD23.22 (both comparisons year on year), according to Statistics New Zealand.  

Bruce Roscoe is a Japan-resident researcher and former foreign correspondent and securities analyst.