Manufacturer and distributor of well-known consumer goods, Pental Limited has pocketed nearly $4.5 million, more than double the amount intended, from a heavily oversubscribed share purchase plan, or “SPP”, related to its acquisition of e-commerce business, Hampers With Bite. The acquisition could transform Pental’s sales networks for many of its iconic brands that include Huggie, White King, Jiffy and Velvet to name just a few.
Pental has been working towards a major strategic objective of expanding its e-commerce sales channels to generate growth in volume, revenue and margins of its big-name brands, which also include Softly, Duracell and Little Lucifer.
Excluding batteries, nearly 80 per cent of the Pental’s sales in the 2021 financial year stemmed from large supermarkets and grocery stores.
According to Pental, the acquisition of Hampers With Bite will enable Pental to diversify its existing sales channels and turbo-charge its e-commerce-led growth strategy aimed at reducing reliance on lower margin supermarket sales.
A total maximum consideration of $28.3 million has been scheduled for acquisition of Hampers With Bite. As part of the deal, the Hampers With Bite vendors are on an earn-out with Pental that will see them potentially land another $4 million if Hampers can achieve an EBIT of $6.3 million in FY22.
The money raised through the oversubscribed SPP forms a part of the total funding package for the purchase of Hampers.
Some $21.3 million of the package is to be funded through a combination of $9 million in cash, $5.7 million in bank debt, a $6 million institutional placement at $0.38 per share, together with the $2 million SPP also at $0.38 per share.
The SPP was designed to provide an opportunity for existing Pental shareholders to participate in the capital raise.
Management says it has accepted all shareholder applications under the SPP, adding a total of $4.466 million to its coffers. The $2.466 million in additional funds will provide stability to the company’s operations during a Covid-19 impacted economy, according to Pental management.
The cash boost will also provide Pental with flexibility to pursue other potential growth opportunities.
The company recently delivered its full 2021 financial year results returning $125 million in revenue and a net profit after tax of $5.61 million, up an impressive 11.7 per cent on the 2020 number. Underlying EBIT clocked in at about $8.15 million in FY21, a rise of more than 10 per cent on the FY20 results.
Founded in 2004, Hampers With Bite is an online hamper and gifting specialist running both a business-to-business and business-to-consumer model. It supplies gift hampers and food and wine hampers to its consumer database through a mix of own brand and third-party products.
Management believes Hampers With Bite’s established online sales channels could provide “transformative” growth potential for Pental.
Hampers With Bite returned an impressive unaudited FY21 EBITDA of more than $5 million against revenues of $24 million in the same period.
Pental estimates total combined group pro-forma net sales revenue for FY21 would rise to $148.9 million after taking the acquisition of Hampers With Bite into account. The total combined gross profit margin is also set to hike from about 27 per cent to some 32 per cent post purchase, reflecting Hampers greater reliance on retail sales.
Notably, the combined group pro-forma underlying EBITDA is predicted to touch $17.1 million after the acquisition.
Hampers With Bite is a curious business that has managed to build a surprisingly profitable business – its greatest asset however for Pental, is likely to be its existing back end and e-commerce infrastructure that could introduce the traditional wholesaler to a whole new world.
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