Mergers and acquisition activity is on the rise again with Blackmores buying family-run supplements business FIT-BioCeuticals for $40 million to boost its vitamin and health product range.
Blackmores will acquire the 100% of the issued share capital of BioCeuticals, which had $38 million in turnover last year and $4.6 million profit.
Blackmores chief executive Christine Holgate told SmartCompany she was aware the acquisition stood out in a muted mergers and acquisitions market.
“Bringing BioCeuticals under our umbrella has nothing to do with the time in the market, we just believe it is the right strategic fit for both our companies,” Holgate says.
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“BioCeuticals has earned strong credibility in the practitioner channel where they lead the market and are renowned for their quality, highly efficacious products.
“Blackmores and BioCeuticals are built from the very same philosophical values. Michael Hall, the founder of the company, has known the market for a long time.
“They actually specialise in serving the practitioner market here in Australia, which is a part of the market we are very small in. We only do $2 million sales in that part of the market.”
Holgate says BioCeuticals specialises in therapeutic dosage medicine that can only be sold by a health care practitioner.
“We will continue to run it as a standalone company as they serve a very different part of the market, but we also want to invest in the business and Blackmores brings with it a wealth of resources, not just financial but resourcing and knowledge,” Holgate says.
She says Blackmores is not looking for further acquisitions at this stage.
“Not necessarily, this is really the first significant acquisition Blackmores has done in many, many years. It has nothing to do with timing, we have just long desired this company and respected it.”
Sean Hall, the founder’s son and managing director of BioCeuticals, will stay on for three months while Blackmores finds a new managing director, but other than that Holgate says she hopes all staff will remain.
The transaction will involve an acquisition of all BioCeuticals shares, free of debt, and is scheduled for completion on July 5, 2012.
“The transaction will be fully debt-funded from additional facilities agreed with our banking partner,” Holgate says.
“Blackmores has always had a conservative approach to debt management and has a strong balance sheet. Including this transaction, Blackmores’ debt will remain comfortably within our debt targets.”
Another company which has not been put off by the flat mergers and acquisitions market is Rubik Financial, which has signed a conditional agreement with Macquarie to purchase Coin Software off the investment bank.
Rubik informed the market yesterday of its conditional agreement to acquire 100% of the share capital of Coin and all associated intellectual property rights from Macquarie for a purchase price of up to $23.75 million.
The agreement will see the separation of Coin into two distinct and independent financial software offerings, one servicing the institutional market and one servicing independent financial advice practices.
Macquarie’s financial planning software offering for IFA clients will operate under a new name, to be announced later this year.
Rubik chairman Craig Coleman told SmartCompany that Rubik had been “on the lookout for a decent acquisition for a while”.
“We are in the business of providing software to financial institutions so it is a logical acquisition,” he says.
Coleman says Coin is a longstanding piece of software with quality clients, but he also thinks Rubik can improve the product.
“At the moment we are committed to the upgrades in train but we have quite strong skills around mobile banking and internet banking software, so we can work to improve the user interface for advisers for tablets and other devices,” Coleman says.
“For now the main objective is to make this work and make it work well. In terms of our company objective, our ambition is to be a specialist financial institution software provider, so there are plenty more opportunities in that domain.”
Coleman says Coin’s 50 staff will come across to Rubik and all have been offered employment “on equal or better terms.”
Tony Graham, head of Macquarie Adviser Services, said the separation of Coin into two distinct institutional and boutique offerings would create a “great opportunity” for more focused growth in both parts of the market.
“Rubik Financial will focus on the needs of institutional clients, deepening their offering to this market, while at Macquarie we will be able to further develop our specialist focus on delivering market-leading financial and technology solutions and services tailored to the specific needs of IFAs,” Graham said in a statement accompanying the announcement.