The Wattle Health Australia Ltd (ASX: WHA) share price has had a positive start to the week.
In morning trade the fledgling infant formula company's shares are up 3.5% to 76.5 cents after providing an update on its acquisition of Blend and Pack.
What was announced?
In February the company announced that it would purchase an additional 46% stake of Australia's largest independent nutritional dairy manufacturer, Blend and Pack, for $46 million.
This purchase was to be funded by a private placement debt issue to be managed by international capital advisory firm, Exotix Capital.
According to today's announcement, following an extensive global marketing process, a number of significant international funds have signed non-disclosure agreements and are in active discussions with Wattle Health and Exotix as they complete their investor due diligence process.
Later this week management presentations and investor site tours are scheduled to commence with multiple parties travelling to Australia with the intent to finalise definitive terms soon after.
What now?
This agreement will see Wattle Health take its Blend and Pack stake to 51%, giving the company a majority holding in the CNCA accredited dairy products processing and packaging facility.
Wattle Health's executive chairman, Lazarus Karasavvidis, believes the acquisition puts the company in a unique position to add value across every aspect from the farm gate, processing, and production supply chain and distribution.
He said: "With this acquisition WHA becomes a fully vertically integrated Australian organic dairy company with influence, control and bricks and mortar investments through the entire value chain – from the farm gate to the consumer."
Adding: "We now have the ability to influence every step in the production process with the objective that our Wattle products contain only the highest quality Australian ingredients with products manufactured and packaged to world's best standards."
Should you invest?
Whilst I think this is a good move by the company, only time will tell whether the investment pays off.
I'm not overly convinced there is room for its products in a crowded market and believe investors would be better off sticking with market leaders such as A2 Milk Company Ltd (ASX: A2M) and Bellamy's Australia Ltd (ASX: BAL).
