Years of hard graft pay off for Charlie's founders

UPDATED TUESDAY: There has been an overwhelmingly positive response to news that Japanese drinks giant Asahi plans to buys Kiwi juice company Charlie's for $130 million.

Comments left of the NBR website congratulate Charlie's founders Marc Ellis and Stefan Lepionka for building up a strong company, albeit with some hard times along the way, and celebrate their success.

"Fantastic news and well done to Marc and Stefan. A brilliant success and richly deserved. I just wish I'd kept my shares!," one reader commented.

Another, while praising the Charlie's pair, suggested the government should act to encourage more similar success stories: " Heartiest congratulation to the business team and investors. Now how about company tax at 20% or less to encourage more entrepreneurs?????"

It was June 1999 when Marc Ellis fielded a call from Stefan Lepionka suggesting they get together for a beer and talk about fruit juice.

At the time Mr Ellis was rounding out a successful rugby career while setting up a fledgling orange juice business in Auckland called "The Daily O". Mr Lepionka had just ended a two-year restraint of trade agreement after selling his former juice company Stefan’s to Frucor and was ready for a new challenge.

While Mr Lepionka liked what he saw in The Daily O, the brand name didn’t seem to work. After a few more beers they came up with the name Charlie’s – a generic term that could be applied to almost anything.

The name Charlie’s was actually born from a character in a book Mr Ellis was reading at the time – Jeffrey Archer’s “As the Crow Flies”, a rags to riches saga of a London East Ender called Charlie Trumper who turned a vegetable stand into a huge department store.

Fast forward to today and there are some similarities with that tale and what the two juice makers and their colleague Simon Neal have created.

An announcement today that Japanese drinks giant Asahi intends to buy Charlie’s for $130 million is immensely satisfying for the trio who intend to stay on with the company for a while longer should the takeover be accepted.

“We’re stoked but tentative as there’s still some water to go under the bridge,” Mr Ellis said.

“This is a nice step, a reflection of 12 years of hard work,” said Mr Lepionka.

The deal, subject to shareholder approval and OIO approval, would see Asahi pay 44c a share for all the shares in the company – a 57% premium to Friday’s closing price.

The three founders and major shareholder Collins Asset Management have entered into a lock in agreement to sell their stakes (a combined 52%) and the Charlie’s board has recommended the offer to shareholders subject to better offers and the independent valuation report.

Charlie’s listed on the NZX in 2005 through a back door listing via Spectrum Resources.

The last 12 months has been especially eventful with the company signing up contracts to sell its products, including its Old Fashioned Lemonade range, in large Australian supermarkets.

With Australian sales running fast, the company was forecasting gross sales of up to $50 million for the 2011 financial year, rising to $91 million in 2012.

Earnings before interest, tax, depreciation and amortisation were forecast to rise for $4.5 million this year to $11.3 million in 2012.

Based on those numbers Asahi’s takeover offer represents a multiple of 27.4 times ebitda guidance in 2011 and 11.5 times ebitda in 2012.

Asahi's Australian managing director David Beguely said Charlie’s was a complimentary business and was pleased Mr Lepionka would stay on with the company.

“Our aspiration is to grow the company, by how much … we’re not going to hold back.”

Mr Lepionka said he was proud to have taken Charlie’s this far but the risks of going it alone on the world market meant it was the best time for new owners to come in.

$18m haul
Both Mr Ellis and Mr Lepionka will make about $18 million each from their shareholdings, should the takeover be approved.

“For me the highlights are probably still to come when in 15 years we can buy a product overseas somewhere and know that was the brand we built. That gives a huge thrill,” Mr Ellis said.

“We used to phone each other when we saw someone drinking a Charlie’s juice, so that’s the excitement – to build a global brand and say we started it,” Mr Lepionka said.

Shareholders would receive offer documents in the week beginning July 18.