Yowie Offers 1-for-1 Share Swap in Conditional Takeover of Keybridge

Background and Offer Details

Yowie Group Ltd (ASX – YOW), a global brand licensing and chocolate manufacturing company, has lodged a Bidder’s Statement announcing an off-market takeover bid for all fully paid ordinary shares in Keybridge Capital Limited (ASX – KBC). The offer is a scrip-for-scrip exchange, with Keybridge shareholders invited to swap each Keybridge share for one Yowie share. The bid is conditional on receiving acceptances representing at least 35% of Keybridge’s issued capital and on Keybridge relinquishing control of Yowie.

Keybridge’s shares have been suspended from trading on the ASX due to financial distress, including a period of voluntary administration earlier this year. The company owes Yowie approximately $6.6 million, a debt that remains unpaid despite court orders and funding promises from Keybridge’s largest shareholder, WAM Active Limited.

Strategic Rationale and Financial Context

Yowie’s bid is positioned as a pragmatic solution to resolve the intertwined financial difficulties of both companies. Keybridge’s administration and ongoing shareholder disputes have severely depleted its value, with recent reports indicating a book value below 3 cents per share. In contrast, Yowie has demonstrated a successful turnaround, achieving its first quarterly operating profit in over five years during the March 2025 quarter, driven by operational improvements and brand revitalization, including the iconic Ernest Hillier chocolate range.

By acquiring Keybridge, Yowie aims to take control of the debt arrangements and enforce repayment, which it believes will be accretive to the value of both entities. The offer also provides Keybridge shareholders an exit from an illiquid and suspended stock into a revitalized company with a clear growth strategy and potential for relisting on the ASX.

Conditions and Legal Challenges

The takeover bid includes several conditions beyond the minimum acceptance threshold, such as no material adverse changes, no regulatory impediments, and no superior alternative proposals. Notably, the bid requires Keybridge to lose control of Yowie, a condition designed to address the current complex ownership structure where Keybridge holds a majority stake in Yowie.

Legal proceedings are ongoing, with Keybridge challenging the validity of a Yowie shareholders’ meeting postponement and attempting to influence Yowie’s board composition. Yowie has also applied to the Takeovers Panel to defer the meeting until after the offer period, underscoring the contested nature of this corporate battle.

Risks and Investor Considerations

Investors should be mindful of the risks outlined in the Bidder’s Statement, including the suspension of Yowie shares from trading, ongoing legal disputes, and the uncertainty surrounding the realization of Keybridge’s debt. The offer’s success depends on regulatory approvals, shareholder acceptance, and the resolution of complex financial and operational challenges.

Tax implications for Australian shareholders are detailed in the statement, with capital gains tax considerations and the absence of brokerage or stamp duty on acceptance. Foreign shareholders will receive cash proceeds from a nominee sale of Yowie shares due to regulatory restrictions.

Looking Ahead

If successful, Yowie intends to consolidate control, potentially delist Keybridge, and pursue a recapitalization strategy to stabilize and grow the combined entity. The bid represents a pivotal moment for both companies, offering a pathway out of financial uncertainty but also posing significant execution risks.