- Healthy takeaway company Oliver's Real Food (OLI) and EG Group have scrapped a long-bartered takeover bid, instead opting to enter a commercial agreement
- The original deal, launched back in March, came into trouble when Oliver's exceeded its net debt limit by $110,000
- As EG did not agree to a waiver agreement to keep the deal going ahead, both parties agreed to terminate the scheme implementation deed
- Instead, the parties have signed a long-term commercial supply agreement and intellectual property (IP) licence
- Under the agreement, EG will pay $500,000 upfront to Oliver's, giving it an exclusive license to use the 'Olivers Food to Go' trademark
- Further to this, EG will sell Oliver's products in its Australian petrol and convenience stores
- And one of the deal's minimum performance requirements includes opening a minimum of 100 OFTG outlets within 12 months
- On the back of this news, Oliver's shares have jumped 65.9 per cent, trading for 6.8 cents each
Healthy takeaway company Oliver's Real Food (OLI) and EG Group have scrapped a long-bartered takeover bid, instead opting to enter a commercial agreement.
In March, Oliver's entered a scheme implementation deed (SID), that would see EG purchase all of Oliver's shares for 10 cents each.
However, the deal was in trouble when Oliver's exceeded its net debt ceiling by $110,000, which meant the company had breached the terms of the initial takeover bid.
Oliver's then asked EG for a waiver, but EG declined the offer. Instead, it allowed Oliver's to save the deal if it came up with some new options.
Since then, a decision on the deal had been pushed back on three occasions.
Out with the old
As EG did not agree to a waiver agreement, the parties have agreed to terminate the SID agreement. As a result, both parties have been released from all obligations under that agreement.
The company has also dropped a call option deed. Under this deed, Hauraki Trustee Company, Twenty Second Sepelda and Niche Group granted EG call options to purchase up to 19.9 per cent of Oliver's shares.
In with the new
Instead, the companies have signed a long-term commercial supply agreement and intellectual property (IP) licence.
EG will pay $500,000 upfront to Oliver's, giving it an exclusive license to use the 'Olivers Food to Go' (OFTG) trademark. EG will sell OFTG products in its Australian petrol and convenience stores.
The supply agreement covers an initial term of 10 years, with an option for both parties to extend the agreement for a further 10 years.
Under the deal, EG is subject to minimum performance requirements, this includes opening a minimum of 100 OFTG outlets within 12 months.
Within the new agreement, Oliver's will keep its ownership of all IP. Further, any improvements or goodwill that could come from the use of its IP by EG, will also be owned by Oliver's.
Oliver's founder and Chairman, Jason Gunn, is pleased to have reached this commercial arrangement with EG.
"EG recognised in Oliver’s a brand with significant credibility in this market, and we have found in EG a fantastic partner to expand the Oliver’s brand rapidly, on a national scale," Jason said.
"We have enjoyed working with the team at EG over the last nine months, and we look forward to developing the relationship in the years to come," he added.
CEO of EG Group Australia, Mike McMenamin, said customers love the health and fresh option in which Oliver's deliver.
"After a successful trial, we look forward to working with the Oliver’s team to provide this offer to many more customers via our network of sites across Australia," Mike told the market.
On the back of this news, Oliver's shares have jumped 65.9 per cent, trading for 6.8 cents each at 11:23 am AEST.