ASX-listed HRL Holdings acquires Analytica Laboratories

Local food testing firm Analytica Laboratories has been bought for as much as $30 million.

ASX-listed HRL Holdings will expand its reach on this side of the Tasman after agreeing to buy local food testing firm Analytica Laboratories for as much as $30 million.

Queensland-based HRL yesterday signed a conditional agreement to buy all the shares of Analytica for a $13.3 million upfront cash payment and $5.7 million of scrip, with a further $11 million up for grabs if certain earnings targets are met in the following two years. The deal will be funded by a A$15 million placement to sophisticated investors at 8.5 Australian cents apiece, a discount to the 9 cents the shares last traded at on the ASX. HRL would also offer stock to existing investors in a share purchase plan on the same terms.

"The acquisition is transformational and positions HRL for its next stage of growth by expanding the business' capabilities and expertise in new markets," chief executive Steven Dabelstein said in a statement to the ASX.

HRL made a foray into New Zealand with the acquisition of Precise Consulting lab testing in 2014, and generated sales of A$7.3 million in the year ended June 30, more than half its annual revenue of A$13.6 million.

The deal is contingent on regulatory and shareholder approval, and would see the enlarged group generate annual revenue of A$33 million and more than A$7.3 million of underlying earnings before interest, tax, depreciation and amortisation in the June 2018 year. Of that Analytica would deliver A$11 million of revenue and A$4 million of earnings.

Cambridge-based Analytica employs 70 staff and specialises in testing honey, milk, methamphetamine and environment markets. It also has a 26 percent interest in a joint venture supported by the Chinese Academy of Inspection and Quarantine servicing the dairy export market with a focus on infant formula and received accreditation to service commercial dairy exporters in August.

(BusinessDesk)