Ecoya snaps up Trilogy Natural Products

Ambitious candlemaker Ecoya has leapt into skincare with the purchase today of New Zealand company Trilogy Natural Products for up to $20 million.

The deal adds an instant new dimension to the fledgling Ecoya, which listed in May after raising $10.1m in an initial public share offer.

Ecoya executive chairman Geoff Ross said adding Trilogy's brands was a natural progression for the company.

''Trilogy is a leader in Australasia and it shares similar views to us on natural ingredients and the emerging opportunities in the affordable luxury category,'' he said.

The acquisition involves an immediate $10m cash payment and a further payment of up to $10m, half  in cash and half in $1 shares, dependent on Trilogy reaching earnings targets next year. It will be financed through a mix of debt and new equity organised by Craigs investment Partners and supported by The Business Bakery - an investment company owned by Ross and his former colleagues at 42 Below, Grant Baker and Stephen Sinclair.

The Business Bakery owns 65 per cent of Ecoya.

Trilogy, founded by sisters Sarah Gibbs and Catherine de Groot in Wellington eight years ago, markets a range of 40 skincare products based mainly on rosehip oil. Its revenue last year was $9.5m and Ross said the company is profitable, although profits were not disclosed.

On those numbers Trilogy is slightly bigger than three-year-old Ecoya, which is predicting revenue of $8m in the year to March 2011.

Ross said buying Trilogy would accelerate Ecoya's growth. ''Trilogy is a profitable company and therefore it brings Ecoya's timing for profit forward as well.''

He said the businesses would be run as separate divisions for the next year, but there were obvious synergy benefits in a combined ownership.

''Trilogy is very active in the UK and Ireland - it is now in selected Boots stores for example - but has no presence in the US. Ecoya hasn't entered the UK yet, but is well under way in the US.''

Ecoya's range of 30 scented candles and bath products has gained a foothold with several major retailers, including David Jones in Australia and Lane Crawford in Hong Kong, while Trilogy's 40 products are sold in about 3500 stores including Myer in Australia and Harrods in Britain.

Ecoya's shares were trading at 80c before the announcement today, valuing the company at $34.5m.