Story image

Just Water agrees to sell Australian business for A$11 million to Waterlogic

13 Apr 2015

Just Water International, the water cooler and supplies business 79 percent owned by founder Tony Falkenstein, has agreed to sell its Australian business to Waterlogic Australia for A$11 million in cash to repay debt and fund growth.

The purchase requires the approval of Just Water shareholders at a meeting on April 28, with the deal expected to be completed about May 1, the Auckland-based company said in a statement. The board of NZAX-listed Just Water supports the sale and unanimously recommend it, it said.

Just Water said it was approached by Waterlogic this year about the acquisition of the Australian water dispenser rental and servicing business. It says the offer values its Australian business at 6 times 2014 annual earnings before interest, tax, depreciation and amortisation, compared with a KordaMentha valuation of the Just Water group at 4 to 4.5 times earnings.

"Retaining the Australian business (if valued at the purchase price of A$11 million) produces a lesser return for the group relative to sale," the company said.

Just Water intends to use the sale proceeds to repay its existing $10.7 million net debt to Bank of New Zealand.

"As a result, Just Water will have no interest bearing bank debt and potentially a small surplus available for potential growth initiatives," it said. "No change in strategic direction or dividend policy is envisaged by the board."

Just Water said growth in its Australian business is limited due to a lack of opportunity for new sites, pressure on rental rates and minimal new product development.

"Based on the relative contribution, size and prospects of the Australian operations, current trading conditions, the competitive environment and further weakening of the Australian dollar relative to the New Zealand dollar, the board has formed the view that the price agreed for the Australian operations at least equals, if not exceeds, a fair attribution of its relative value to the whole Just Water group.

"A sale of the Australian operations to a well-funded and established competitor which can extract synergies from he resulting scale benefits is strategically sound and will reduce operational and financial risk for the group, enabling management to focus on one geography and one set of market dynamics."

Waterlogic, which has operations in 50 countries, was acquired in January by European private equity investor Castik Capital which aims to create a leading global water cooler business.

Shares in Just Water last traded at 13.1 cents.

Security flaw in Xiaomi electric scooters could have deadly consequences
An attacker could target a rider, and then cause the scooter to suddenly brake or accelerate.
Four ways the technology landscape will change in 2019
Until now, organisations have only spoken about innovative technologies somewhat theoretically. This has left people without a solid understanding of how they will ultimately manifest in our work and personal lives.
IDC: Top 10 trends for NZ’s digital transformation
The CDO title is declining, 40% of us will be working with bots, the Net Promoter Score will be key to success, and more.
Kiwi partner named in HubSpot’s global top five
Hype & Dexter is an Auckland-based agency that specialises in providing organisations with marketing automation solutions.
Moustache Republic expands Aussie presence with new exec
The Kiwi digital commerce partner has appointed a Sydney-based director to oversee the expansion of the company’s Australian footprint.
Epson’s new EcoTank range with two years printing per tank
With 11 new EcoTank printers that give an average user two years of printing and cost just $17.99/colour to refill, Epson is ready to change the game.
Te reo Māori goes global via language app called Drops
If you’re keen to learn a few words of Māori – or as much as 90% of the language, you may want to check out an Android and iOS app called Drops.
Reckon Group announces a steady profit in 2018
Reckon continued its investment in growth throughout the year with a development spend of $14.3 million.