Yowie takeover bid ends
AURORA Capital has abandoned its planned takeover of Yowie and says it would instead support winding up the Australian chocolatier if management cannot plot a convincing near-term turnaround strategy.
Aurora said it had “regretfully” reached the decision that Yowie’s June quarter financials, released on Thursday, represented a material adverse change that would trigger a defeating clause in its $19.6 million takeover bid.
The private equity firm accused Yowie, whose shares dropped by as much as 12 per cent after emerging from a trading halt yesterday, of rationalising a continued poor performance.
Yowie said it disagreed with Aurora’s summation of its results but welcomed the withdrawal of its “extremely unattractive unlisted scrip takeover bid”.
Aurora’s withdrawal came after Yowie announced it expected a full-year earnings loss of $US2.3 million ($3.31 million) – including a $US1.2 million loss in the three months to June 30 – due to increased marketing and legal costs.
Yowie said its FY19 loss would be an improvement on the $US5 million loss the previous year, while chief executive Mark Schuessler flagged a return to net sales growth in FY20 as new products rolled out and distribution expanded.
Aurora, however, said it believed Yowie’s final FY19 result would be worse than it had stated, and that the preliminary figures released on Thursday still flew in the face of management’s promises to stabilise the company by the end of FY19. “In Aurora’s opinion, it believes Yowie’s business is performing well below previous guidance provided by the company’s board and management,” the fund manager said in a release.
“Further, the company has continued to rationalise its adverse performance, whilst operating losses have continued to increase unabated, with no clear pathway towards profitability.”
Aurora said while it would continue to monitor the Yowie business, it would support the company pursuing an orderly wind-up if things didn’t get better.
Yowie, which sells the chocolate characters Rumble, Boof, Crag, Ditty, Nap and Squish, pledged this month to return at least $4.4 million to shareholders in an attempt to fight off Aurora’s unsolicited bid.
Yowie Group chairman Louis Carroll (left) had told shareholders that Aurora had “severely undervalued” the company and urged investors to reject the takeover attempt.