Keytone Dairy has signed a share purchase agreement (SPA) to acquire Melbourne-based ultra-high temperature processed (UHT) drinks manufacturing firm Omniblend for A$22.6 ($15.5m).

As per the agreement, Keytone will offer A$10m ($6.8m) in Keytone shares to Omniblend vendors and A$8m ($5.4m) in cash on completion. A settlement of Omniblend existing debt of up to A$4.6m ($3.1m) will also be included.

The transaction includes an issue of performance shares convertible into Keytone shares, if there is a significant improvement in Omniblend’s performance over the next three years.

Keytone chairman Peter James said: “This is a compelling and transformational acquisition for Keytone. Omniblend is a leading Australian manufacturer in the health and wellness sector, with both dry powder and ready to drink dairy based product capability.

“Keytone is fast-tracking its development and the Acquisition is underpinned by a strong strategic rationale and articulated upon our four-pillar growth strategy. Importantly, the Acquisition is highly earnings per share (EPS) accretive for Keystone’s existing shareholders.”

“The acquisition offers scale and diversification to Keystone’s existing business, with a depth of product offering and manufacturing expertise and capability.”

Keytone intends to fund the acquisition through the placement of up to A$8m ($5.4m) to institutional and sophisticated investors, and a share purchase plan to raise up to A$10m ($6.8m) for shareholders.

Completion of the deal is subject to the shareholder’s approval at the shareholders’ meeting expected to be held during the second half of July 2019.

Established in 2008, Omniblend is engaged in the production of formulated, blended powder products and long-life UHT drinks, specialising in the health and wellness sector. The acquisition includes Omniblend’s four Australian manufacturing sites, as well as a new site that is currently being completed in New Zealand.

With the acquisition, Keytone expands its product portfolio, which includes whey protein, sports nutrition, nutraceuticals and ready-to-drink (RTD) long life UHT products.

The acquisition of Omniblend facilities will enable Keytone to contract manufacture high-value formulated, blended powder products and UHT drinks.

The deal allows Keytone to focus on the Chinese market as Omniblend holds an accreditation from the Certification and Accreditation Administration of the People’s Republic of China.

Keytone Dairy is an Australia and New Zealand-based manufacturer and exporter of the dairy formulated products.