SunRice Group Expands into Pet Food Market with SavourLife Acquisition
SGL (SGL) Share Update July 2024 Monday 22nd
SunRice Group Announces Acquisition of SavourLife
The SunRice Group has announced a strategic acquisition of SavourLife, an Australian pet food company, for A$20.3 million. This move aims to expand SunRice's CopRice business into the branded pet food market.
Instant Summary:
- SunRice Group to acquire 100% of SavourLife for A$20.3 million.
- SavourLife specializes in premium dog food and treats.
- CopRice will integrate SavourLife to expand into the branded companion animal market.
- SavourLife's mission includes saving and re-homing abandoned dogs.
- The acquisition is expected to be accretive to CopRice’s EBITDA in FY25.
Acquisition Details
The SunRice Group, through its CopRice business, has signed a share purchase agreement to acquire 100% of SavourLife, an Australian pet food company, for A$20.3 million. SavourLife is known for its premium dog food and treats and has a strong social mission to save and re-home abandoned dogs.
CopRice will utilize its existing manufacturing and nutrition capabilities to accelerate the growth of SavourLife while continuing to support its social mission. The acquisition aligns with SunRice's strategy to expand into branded products, particularly in the companion animal market.
Financial Impact
SavourLife had revenue of $33.4 million and a normalised EBITDA of approximately $2.8 million for the year ending April 30, 2024. The acquisition is expected to be accretive to CopRice’s EBITDA contribution to the SunRice Group in FY25.
The purchase price will be funded from existing cash reserves and available debt facilities. Completion of the transaction is expected by August 30, 2024, pending standard conditions precedent.
Strategic Fit
SunRice Group CEO, Paul Serra, emphasized that the acquisition positions CopRice to further expand into the branded companion animal market, which has seen growing demand for premium products. SavourLife will complement CopRice’s existing product range, known for its quality ingredients.
CopRice already manufactures SavourLife's dog food range, and the acquisition will leverage CopRice’s existing manufacturing facilities and supply chain to improve efficiencies and provide growth opportunities.
Social Mission
SavourLife is driven by a social mission to save and re-home abandoned dogs, donating 50% of its profits to rescue organizations. Since its inception, SavourLife has donated over $8 million and supported the re-homing of more than 63,000 dogs. CopRice is committed to continuing this mission post-acquisition.
This acquisition is a strategic move for the SunRice Group, allowing it to tap into the growing pet food market. The integration of SavourLife into CopRice is expected to enhance operational efficiencies and drive revenue growth. Investors may view this as a positive development, given the potential for increased EBITDA contributions and alignment with SunRice's strategic objectives.
Investor Reaction:
Analysts and investors have generally reacted positively to the announcement, noting the strategic fit and potential for growth in the branded pet food market. The continued support for SavourLife's social mission has also been well-received.
Conclusion:
SunRice Group's acquisition of SavourLife represents a significant step in expanding its presence in the branded pet food market. Investors should watch for the completion of the transaction and monitor the integration process for potential impacts on SunRice's financial performance. The continued focus on SavourLife's social mission adds an ethical dimension to this strategic move.