Why Bubs Australia Ltd shares are flying again

Shares in Bubs Australia Ltd (ASX:BUB) are up 6% on an announcement of a transformative acquisition.

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The Bubs Australia Ltd (ASX:BUB) share price is up 6% in early trade today after announcing it had reached an agreement to acquire 100% of Nulac foods.

The acquisition consideration is A$25 million in cash with further payments of up to A$13.4 million over two years if certain performance targets are met.

The acquisition is dependent on shareholder approval, which will be sought at the general shareholder meeting in December.

Bubs Australia Limited is engaged in the business of production and sale of infant milk formula and organic infant food in the infant food category under the BUBS brand.

Chief Executive of Bubs Australia, Nicholas Simms said: "This transformative acquisition is underpinned by a compelling rationale that would see Bubs controlling its own destiny. This has been uppermost in our minds on our strategic journey and this transaction represents an important step in our efforts to expand our domestic and China business."

The company also announced a share placement to raise approximately A$15 million at $0.60 per share. An offer will also be made to existing shareholders to raise another A$5 million at $0.60.

Bubs listed in January this year and the share price has risen 113%.

Motley Fool contributor Christopher Coe does not own shares in BUB. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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