Here’s why Pure Foods (ASX:PFT) is on the move today

Summary

  • Pure Foods has decided to acquire Lauds Plant Based Foods Pty Limited for a total of $350,000.
  • Lauds is a Tasmanian based food producer that produces a wide range of dairy and cheese alternatives made from plants.
  • Pure Foods’ share price shot up by 9.2 per cent to A$0.83 (as at 10:49 AM AEDT).

On 2 February 2021, Pure Foods Tasmania Limited (ASX:PFT) has announced that it has agreed to acquire Lauds Plant Based Foods Pty Limited (Lauds). The company will be shelling out a total of $350,000 (in addition to working capital adjustment). The settlement of the acquisition will be in the combination of Pure Foods’ shares (at a price of $0.879 per share) and cash in an approximate split of 60/40.  

Image Source: © Kalkine Group 2021

Post the acquisition, Pure Foods would immediately start reaping the benefits of synergies including IP sharing, combined distribution, significant cost savings etc. The three founders of Lauds would continue to have a role in the consolidated company. Simon and Dani would remain in the core business, while Pia would continue to assist in sales and marketing.

Lauds is currently providing all of its product range to Pure Foods’ newly launched Pastures range. The success of this small partnership has reaped mutual benefits to both the companies, which eventually led to the acquisition by Pure Foods.

Lauds and new Pastures product range would work alongside each other with different target markets. Lauds would focus more on the traditional lifestyle motivated plant-based market while New Pastures would target a broader mass consumer market, making it more of a volume play.

Lauds' product range will additionally be sold through Pure Foods robust distribution channel. A wide range of distribution channels would also be available with Pure Foods, established by Lauds to cater to a niche market i.e. health foods.  

Read More: Bunji Signs Agreement to Acquire Pure Foods Tasmania Pty Ltd

About Lauds Plant Based Foods

Lauds is a Tasmania based food producer that produces a wide range of dairy and cheese alternatives from plants (majorly from nuts and oats). The company has small to medium-sized operations, eying a revenue of $400,000 for FY21, an increase of 150 per cent over FY20. The company is also operating at positive EBITDA and NPAT.

Stock Performance

Image Source: © Kalkine Group 2021

The acquisition deal seems to have cheered Pure Food’s investors, which led its share price to shoot up by 9.2 per cent to A$0.83 (as at 10:49 AM AEDT). The stock has been consistently trending down since the last three months, delivering a negative return of 26.5 per cent (including today’s gain).

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