Wattle Health Australia Ltd (ASX:WHA) is continuing to execute on its business plans in China by entering into a strategic agreement to acquire a 5% equity interest in Blend and Pack Pty Ltd.
Blend and Pack is one of the largest manufacturers of nutritional dairy products in Australia and a holder of a CNCA licence for the Chinese market.
Mason Food, a subsidiary of Mason Financial Holdings Ltd (HKG:0273), is also acquiring a 75% equity interest in Blend & Pack along with Wattle Health.
Wattle Health and Mason are in aggregate purchasing 80% of the fully diluted capital of Blend & Pack for $80 million, with Wattle's contribution being $5 million for its 5% equity interest.
Wattle Health has paid a 10% deposit ($500,000) as per the terms of the conditional acquisition agreement, which is expected to be completed within 28 days.
Under the acquisition terms, Blend & Pack is to nominate Wattle Health’s infant formula with the China Food and Drug Authority (CFDA) for its "first brand slot" under applicable Chinese regulations.
Via the acquisition of Blend & Pack, Wattle Health aims to secure production of their full nutritional dairy range products from an Australian CNCA licensed manufacturer.
Wattle Health has also entered into a retail distribution partnership with Tesco Lotus Supermarket Co in China to supply its infant formula range.
Tesco Lotus is part of Tesco PLC (LON:TSCO), one of the largest retail organisations globally, and recently entered the Southern Chinese province of Guangdong as part of their China market strategy.