Bubs Australia Announced A Strategic Equity-Linked Alliance With Chemist Warehouse

  • Apr 18, 2019 AEST
  • Team Kalkine
Bubs Australia Announced A Strategic Equity-Linked Alliance With Chemist Warehouse

Leading producer of goat dairy products, Bubs Australia Limited (ASX: BUB) has signed a binding heads of agreement with the Chemist Warehouse Retail Group, Australia’s largest pharmacy chain network by total sales, to sell Bubs® existing product in Chemist Warehouse pharmacies nationally. Through this agreement, the company will form a four-year strategic alliance relating to the sale and promotion of Bubs® products in Chemist Warehouse stores, commencing 1 June 2019.

Following the release of this news, the share price of the company increased by 7.595% during the intraday trade as on 18 April 2019 (AEST 1:26 PM).

Bubs Australia will surely be benefitted by this relationship with Chemist Warehouse as it will help Bubs in selling its products across Chemist Warehouse retail stores throughout Australia, including its domestic and Tmall online stores. It is expected that Chemist Warehouse will maximise the potential of the Bubs® brand, in return for a marketing and promotional fee charged to Bubs.

Although Chemist Warehouse has been stocking limited ranges of Bubs® products online for some time, through this partnership it will be able to deepen its relationship with Bubs. Further, Chemist Warehouse has also agreed to invest all of the marketing and promotional fees to subscribe for shares in Bubs. Chemist Warehouse is going to use sales and marketing fee to purchase up to 49,426,508 shares in Bubs over three years and initially, Chemist Warehouse will purchase 12,356,627 fully paid ordinary shares in Bubs. Then it will purchase a maximum of 37,069,881 additional Bubs shares, subject to the satisfaction by Chemist Warehouse of certain sales performance targets relating to the actual sales of Bubs® products in Chemist Warehouse stores over a three-year period.

According to Chemist Warehouse Chairman and Co-Founder, Jack Gance, by investing in Bubs, Chemist Warehouse is moving from a conventional supplier-customer relationship to a mutually beneficial long-term partnership to bring the Bubs range to an even wider public. Chemist Warehouse believes that Bubs range of products represents high-quality Australian infant nutrition that Chemist Warehouse’s customers are looking for.

With its key partners in place and a fully vertically integrated business with milk pool security and ownership of its manufacturing facility, Bubs Australia Limited is now ready for rapid global expansion.

Now, let’s have a glance at the company’s stock performance and the return it has posted over the past few months. The stock is trading at a price of $0.850, up by 7.595% during the day’s trade with a market capitalisation of ~$351.42 million as on 18 April 2019. The counter opened the day at $0.835 and reached the day’s high of $0.895 and touched a day’s low of $0.830 with a daily volume of ~ 15,096,695. The stock has provided a year till date return of 73.63% & also posted returns of 51.92%, 83.72% & 2.60% over the past six months, three & one-month period respectively. It had a 52-week high price of $0.940 and touched 52 weeks low of $0.355, with an average volume of ~ 3,652,478.


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