Blackmores enters into Scheme
Implementation Deed with Kirin
This announcement was authorised for release by the Board of Directors of Blackmores Limited.
KEY HIGHLIGHTS
• Blackmores Limited (Blackmores) has entered into a Scheme Implementation Deed with Kirin
Holdings Company, Limited (Kirin) for the acquisition of 100% of the issued share capital of
Blackmores by way of a scheme of arrangement (Scheme)
• Under the terms of the Scheme, Blackmores shareholders will receive cash consideration of
$95.00 per Blackmores share, less any special dividend declared or paid prior to implementation
of the Scheme (Scheme Consideration)
• If the Scheme becomes effective, the Blackmores Board intends to declare a fully-franked special
dividend of $3.34 per Blackmores share (subject to availability of franking credits)1 (Special
Dividend) payable on or immediately prior to implementation of the Scheme, which is expected
to enable eligible shareholders to benefit from franking credits of $1.431 per Blackmores share
attached to any such Special Dividend
• Blackmores’ Board unanimously recommends the Scheme, subject to conditions outlined below
• Blackmores’ largest shareholder, Marcus Blackmore, who holds or controls approximately 18% of
Blackmores’ ordinary shares outstanding as at the date of this announcement, has informed
Blackmores that he has agreed with Kirin to vote 3,516,834 Blackmores shares held or controlled
by him in favour of the Scheme, unless otherwise directed by Kirin
• The Scheme Consideration represents a 23.7% premium to last close, a 30.5% premium to the
Blackmores one-month volume weighted average price up to and including 6 April 20232 and an
implied acquisition multiple of 23.1x LTM Dec 22 EBITDA3
• The Scheme is subject to certain conditions, including informal clearance by the Australian
Competition and Consumer Commission (ACCC), and approval by the Australian Foreign
Investment Review Board (FIRB), and the State Administration for Market Regulation (SAMR) of
the People’s Republic of China
• Blackmores shareholders do not need to take any action at this time
OVERVIEW
Blackmores Limited (ASX: BKL) (Blackmores or the Company) announced today that it has entered
into a Scheme Implementation Deed with Kirin Holdings Company, Limited (TSE: 2503) (Kirin) for the
acquisition of 100% of the issued share capital of Blackmores by way of a scheme of arrangement
(Scheme).
If the Scheme is implemented, Blackmores shareholders will receive total cash consideration of $95.00
per share (Scheme Consideration), less any special dividend declared and paid to Blackmores
shareholders on or before the date of implementation of the Scheme. A fully-franked special dividend of
$3.34 per Blackmores share (subject to availability of franking credits)4 (Special Dividend) is expected
to be paid, resulting in franking credits of $1.434 per Blackmores share attached to any such Special
Dividend.
DETAILS OF THE SCHEME CONSIDERATION
The Scheme Consideration values Blackmores’ equity at approximately $1,880 million5
, and at an
enterprise value of approximately $1,840 million6
, and represents:
• a 23.7% premium to the last close price of $76.79;
• a 30.5% premium to the 1-month volume weighted average price (VWAP) up to and including 6
April 20237 of $72.80;
• a 29.7% premium to the 12-month VWAP up to and including 6 April 20237 of $73.22; and
• an implied EV / EBITDA multiple of 23.1x Blackmores’ LTM Dec 22 underlying EBITDA8
.
BLACKMORES DIRECTORS UNANIMOUSLY RECOMMEND THE SCHEME
Blackmores’ Board of Directors unanimously recommends that Blackmores shareholders vote in favour
of the Scheme, in the absence of a superior proposal and subject to an Independent Expert concluding
(and continuing to conclude) that the Scheme is in the best interests of Blackmores shareholders. Each
Blackmores Director intends to vote all of the Blackmores shares that he or she holds or controls in
favour of the Scheme, subject to those same qualifications.
Blackmores Chair, Wendy Stops, said: “The Kirin Scheme represents an attractive, all-cash transaction.
The Blackmores Board believes the agreed Scheme Consideration represents appropriate long-term
value for the Company and an attractive outcome for Blackmores shareholders. The Blackmores Board
has accordingly unanimously recommended that Blackmores shareholders vote in favour of the Scheme,
subject to customary conditions such as independent expert conclusions and no superior proposal.”
Blackmores Chief Executive Officer and Managing Director, Alastair Symington, said: “Today is an
important day in the history of Blackmores. The Kirin proposal recognises the strong leadership position
that Blackmores, through its brands and people, has established in the natural health sector across the
Asia Pacific region over our long history. Importantly it also confirms the significant opportunity that lies
ahead for our employees and other key stakeholders of Blackmores as both companies come together
to combine their focus on growing Kirin’s health science business across the world.
The combination of Kirin and Blackmores is testament to the clarity and ambition of our collective
strategic direction and is recognition of the significant effort, and capital invested at Blackmores over the
past 3 years in repositioning the business for sustainable profitable growth.
Kirin is a leading Food and Beverage, Pharmaceuticals and Health Science company, headquartered in
Tokyo and listed on the Tokyo Stock Exchange with a market capitalisation of A$22.9 billion9
. For
decades, Kirin has sought to leverage its evidence based ingredient technology outside of its core
beverage categories, and has increased its focus on health-related products. The proposed acquisition
of Blackmores will accelerate Kirin’s aspiration to become the leading health science company in Asia4 Subject to availability of franking credits and provided that it will not result in the franking account of Blackmores being in deficit after the
special dividend is paid.
5 Calculated based on 19,450,635 issued ordinary shares and 339,377 outstanding share rights (as disclosed by Blackmores to ASX on 13 April
2023).
6 Based on reported net cash of $75.1 million, lease liabilities of $21.9 million and equity attributable to non-controlling interests of $13.0 million
as at 31 December 2022.
7 Being the last trading day prior to the date upon which Blackmores was the subject of media speculation that it may attract interest as a
takeover target. 8 Based on Underlying EBITDA for the last twelve months to 31 December 2022 of $79.7 million.
9 Calculated based on last close of ¥2,225 and issued ordinary shares of 914,000,000, converted to AUD equivalent at an exchange rate of
88.80 JPY per 1.00 AUD.
Blackmores Limited 3
Pacific. The combined company will have a larger platform to further leverage the Blackmores brand,
accelerate penetration into high growth Asian markets, and expand its presence into new geographies.”
Kirin President and Chief Executive Officer, Yoshinori Isozaki, commented that “Blackmores presents an
exciting opportunity to transform the scale and reach of our Health Science domain. Kirin Group is
working to create social value and economic value by solving social issues through our business
activities, and we have been transforming our business from a brewing business to the business model
creating value across Food & Beverages and Pharmaceuticals domains, based on the concept of "CSV"
(Creating Shared Value).”
Takeshi Minakata, Director of the Board, Senior Executive Officer, President of Health Science Business
Division in charge of Strategy of the Health Science Domain said: “We believe Blackmores will
accelerate the transformation of our Health Science Domain as both Kirin and Blackmores share a vision
to improve people’s lives through our products as well as a commitment to quality, innovation and
investment. We are excited about the growth potential for the Blackmores business and look forward to
supporting its growth and development, and furthering its commitment to quality ingredients and product
development.
Kirin will continue to invest in Blackmores, its brands and its foundations in complementary medicine to
accelerate its growth across the Asia Pacific region and globally. We also recognise the strength and
capability of the Blackmores team and will work with them to build on the proud legacy of the Blackmores
business and to realise its full potential, whilst maintaining its headquarters and manufacturing
operations in Australia.”
DETAILS OF THE SCHEME IMPLEMENTATION DEED
The implementation of the Scheme is subject to various customary conditions. A copy of the Scheme
Implementation Deed (SID), which sets out the terms and conditions of the Scheme and associated
matters, is attached to this announcement. Capitalised terms used in this section below have the
meaning given to those terms in the SID.
In summary, conditions for implementation of the Scheme include:
• the Independent Expert issues an Independent Expert’s Report which concludes that the Scheme
is in the best interests of Blackmores shareholders (and not changing or withdrawing that
conclusion);
• informal clearance by the Australian Competition and Consumer Commission (ACCC);
• approval of the Foreign Investment Review Board (FIRB);
• approval of the State Administration for Market Regulation (SAMR) of the People’s Republic of
China;
• approval of Blackmores shareholders and the Federal Court of Australia; and
• no Material Adverse Change, Regulated Event or Prescribed Occurrence event occurring.
The Scheme is not subject to any financing condition.
Under the SID, Blackmores will be subject to customary exclusivity obligations, including no shop, no talk
and no due diligence obligations, notification obligations and a matching right. A break fee will be
payable by Blackmores to Kirin in certain circumstances.
SPECIAL DIVIDEND
If the Scheme becomes effective, the Blackmores Board intends to declare and pay a fully-franked
Special Dividend of $3.34 per share (subject to the availability of franking credits)10 on or immediately
prior to the implementation of the Scheme. This quantum of the Special Dividend will be dependent on
the franking credits available at the time of the Scheme. Subject to the availability of franking credits,
10 Subject to availability of franking credits and provided that it will not result in the franking account of Blackmores being in deficit after the
special dividend is paid.
Blackmores Limited 4
there may be an opportunity for eligible shareholders to benefit from franking credits of $1.4311 per share
attached to the Special Dividend. The Scheme Consideration will be reduced by the amount of any
Special Dividend (but not for the amount of any franking credits). The payment and the amount of any
Special Dividend remain at the discretion of the Blackmores Board12.
Blackmores will provide an update on the expected quantum of the Special Dividend in due course.
MAJOR SHAREHOLDER VOTING
Marcus Blackmore (who has a relevant interest in approximately 18% of Blackmores’ ordinary shares
outstanding as at the date of this announcement) has informed the Company that he has agreed with
Kirin to vote 3,516,834 Blackmores shares held or controlled by him in favour of the Scheme, unless
otherwise directed by Kirin.
INDICATIVE TIMETABLE AND NEXT STEPS
Blackmores shareholders do not need to take any action at this point in time.
A Scheme Booklet containing information relating to the proposed acquisition, reasons for the Directors’
recommendation, an Independent Expert’s Report, and details of the Scheme meeting will be prepared
and provided to the Australian Securities and Investments Commission for review, and subsequently
sent to Blackmores shareholders.
Shareholders will then have the opportunity to vote on the Scheme at a court-convened shareholder
meeting that is expected to be held in July 2023. Subject to shareholder approval being obtained by the
requisite majorities and the other conditions of the Scheme being satisfied, the Scheme is expected to
be implemented in the third quarter of 2023.
ADVISERS
Barrenjoey Capital Partners and Adara Partners are acting as joint financial advisers, and Herbert Smith
Freehills is acting as legal adviser, to Blackmores in relation to the Scheme.
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DYOR
i hold BKL
and stuff like THAT is why i inherited 4 shareholdings from what was a much larger portfolio