Star Combo Pharma Limited (ASX: S66, Star Combo, the Company) which is invested by Eureka Technology Innovation & Investment (EurekaTechIn), is pleased to announce that it has entered into an agreement to acquire the businesses of Koala Mall Pty Ltd and Austoyou Group Pty Ltd for A$10 million. This acquisition represents the completion of a due diligence period on the Ausway Group of companies as flagged in the Company’s announcement on 8 August 2018.
The CEO of Star Combo Pharma, Su Zhang noted, “The company’s due diligence in August of last year, has resulted in the successful acquisition of Austoyou and the Koala Mall retail business. These acquisitions are consistent with the Company’s listing strategy of acquiring an e-commerce platform that will advance the evolution of our business from a vitamin and supplements manufacturer and supplier to a fully integrated Australia - China health care company with manufacturing and multiple sales channels along with the expansion of our distribution networks”.
Austoyou is a well-established Australia-China e-commerce platform that offers over 5000 high-demand product lines directly to Chinese health product consumers. This direct-to-consumer platform provides Star Combo with an opportunity to significantly increase product sales and accelerate its China growth strategy. Importantly, Austoyou has the ability to provide Star Combo with customer demand feedback and will allow the Company to enhance its product lines according to changing customer demand trends. Austoyou gives Star Combo an immediate competitive advantage in the high-demand market for Australian vitamins, skincare and health supplements into the large China consumer market.
The acquired businesses delivered approximately $17 million in sales in FY18 and have shown growth of more than 20% per annum in the past two years as demand for a broad range of Australian manufactured and quality controlled consumer goods, continues to increase from Chinese consumers.
In 2018 the market in China, for vitamins and health supplements, was estimated to be in excess of US$5.2 billion and growing. Chinese consumers view Australian produced products as being of high quality and subject to rigorous regulation and quality control. Hence, the addition of the Austoyou e-commerce platform, which will deliver Australian made supplements direct to the consumer in China, is viewed by the Company as a transformational acquisition that will accelerate growth plans with a significant near term increase in revenue.
The Koala Mall business provides a retail brand and premium shopping experience to showcase the range of Star Combo Pharma vitamins, skincare, milk products and health supplements at a number of highly visible retail stores in Sydney.