The Costa Group board has backed a reduced takeover proposal from Paine Schwartz
The board of fruit and vegetables company Costa Group has backed a takeover bid from US-based Paine Schwartz Partners, which was trimmed by $100m just this week.
The board of fruit and vegetables company Costa Group has backed a takeover bid from US-based Paine Schwartz Partners, which was trimmed by $100m just this week.
The board has unanimously endorsed the revised $3.20 per share cash bid, which was this week reduced from a previous $3.50 per share proposal.
The reduced offer values the company at $1.5bn and comes after the fruit and vegetable grower revealed it would take a $30m hit in its full-year results because of poor weather conditions.
PSP made it clear earlier this week that $3.20 was its best and final offer, and on Friday the board told the ASX that it “unanimously considers the scheme to be in the best interests of Costa Shareholders and recommends shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to an independent expert concluding and continuing to
conclude that the scheme is in the best interests of Costa shareholders’’.
Costa chairman Neil Chatfield said the board had considered a number of different valuation scenarios, and risks related to its growth plans before deciding to accept the bid.
“While the Costa board has confidence in the long term fundamentals of the company, the scheme provides certainty for shareholders in an uncertain operating environment by delivering cash proceeds to shareholders at an attractive premium.”
PSP knows the Costa business intimately, having been an early investor.
The firm, then called Paine & Partners, at one point it had a 54 per cent stake before Costa was listed in 2015 at $2.25 a share, equating to a $717m market value.
Paine Schwartz founder and president Kevin Schwartz had a seat on the Costa board upon its ASX float.
Costa is Australia’s leading grower, packer and marketer of fresh fruit and vegetables.
It operates mainly in five core categories: berries, mushrooms, glasshouse tomatoes, citrus and avocados.
Costa’s operations include 7200 planted hectares of farmland, 40ha of glasshouse facilities and three mushroom growing facilities across Australia.
Costa also has strategic foreign interests, with majority-owned joint ventures covering six blueberry farms in Morocco and four berry farms in China, covering about 750 planted hectares.
Costa shares were trading at just $2.23 prior to the PSP acquiring an initial 14 per cent interest in the company in October last year, at $2.60 a share.
Costa shares were 6.4 per cent higher at $3.08 in early trade on Friday.
Costa expects the takeover to complete in the March quarter of 2024. The bid requires Foreign Investment Review Board approval.
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