Paengaroa-based Comvita is to acquire New Zealand Honey Limited – one of the largest exporters of NZ honey products and producer of well-known brands Hollands Honey, 3 Bees and Sweet Meadow – by mid-June.

Comvita today confirms it has signed a sale and purchase agreement – worth $12.3 million – to acquire all shares of New Zealand Honey Limited from the New Zealand Honey Producers Co-Operative.

The move by the global natural health products company is conditional only on approval by special resolution of shareholders of NZ Honey Producers Co-Operative Ltd.

The acquisition comprises of all assets of NZ Honey Ltd – including land and honey processing assets in Timaru, honey inventory at settlement and a long-term honey supply agreement with the producers co-operative.

Established in 1981, the producers' co-operative, based in Timaru, has grown to become one of the leading suppliers of honey products in NZ. For 2013, NZ Honey Ltd's sales totalled $27.3m.

The co-operative is owned by 70 beekeeper shareholders, with the majority in the South Island.

Comvita CEO Brett Hewlett says the acquisition goes a long way to address the supply constraints that have been challenging Comvita in recent years.

'We also gain valuable production capacity and additional company exposure in the South Island. 'Historically, Comvita has sourced honey predominantly from the North Island.”

Brett says by purchasing NZ Honey Limited and partnering with NZ Honey Producers Co-Operative, his company is able to combine export initiatives and leverage Comvita's international distribution and premium brand image.

'This acquisition is going to create lasting value for the shareholders of both companies.”

New Zealand Honey Producers co-operaative's chairman Barney Sundstrum says like Comvita, the cooperative has long held the view there is merit in consolidating manufacturing and marketing functions in the honey industry to achieve economies of scale.

'The proposed transaction with Comvita ticks all the relevant boxes, giving existing and future co-operative members greater exposure to the benefits of premium markets – and is unanimously endorsed by the board ahead of the forthcoming special meeting.”

With a purchase price of $12.3m, subject to a working capital adjustment, it'll be payable with $7.3m cash and $5m in Comvita shares issued at $3.50 per share.

The Comvita shares will be held in Escrow and released to NZ Honey Producers Co-Operative annually, during a six-year period.

The acquisition is expected to be earnings accretive per share for Comvita's shareholders and is anticipated to be completed mid-June, 2014.

Comvita will announce its full-year results (to March 31, 2014), this Friday.