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Comvita to reap $30m from sale

NZ Newswire logoNZ Newswire 11/01/2017 Sophie Boot

Comvita, the manuka honey products company, has sold its Medihoney brand to US partner Derma Sciences for about $19 million, and will reap a further $11m selling Derma shares in a takeover offer of the Nasdaq-listed company.

The gross proceeds of the Medihoney deal will amount to US$13.25m, with a US$5m earnout payable on sales milestones being achieved, Comvita said in a statement to the NZX.

Comvita also owns 1.1 million shares in Derma Sciences, which announced on Jan. 10 that it will be acquired by Nasdaq-listed Integra LifeSciences for US$7 per share by the end of March. That values Comvita's stake at about $11 million, it said.

Derma Sciences already held the exclusive global rights to Medihoney wound care products, and in 2016 paid $2.1 million to Comvita in royalties for the use of the brand and trademarks.

Comvita will retain the use of the brand to develop its over-the-counter business, particularly for products to treat eczema, while Derma Sciences will hold the regulatory approvals to make products to European and US medical device quality standards. The deal also includes a 10-year honey supply agreement between the two.

The Te Puke-based company told shareholders in October that it expects to post a loss for its first half, ended Dec. 31, after tough trading and significantly lower sales in the first quarter due to the impact of regulatory changes in China.

It expects a full-year profit of $17.1m, entirely produced in the second half.

Comvita shares last traded at $8, up 0.9 per cent on Thursday. They have declined 7.6 per cent in the past year, having peaked at a record $12.85 in May 2016.

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