Costa Group’s landlord Vitalharvest sets deadline for takeover bidding war

Vitalharvest has taken the unusual step of seeking to end the bidding war for the listed property trust, issuing an ultimatum to suitor Roc Partners.

Vitalharvest has set a deadline to end the bidding war to take over the berry farm owner.

Vitalharvest has taken the unusual step of seeking to end the bidding war for the listed property trust, telling suitor Roc Partners it must submit its best and final offer by Wednesday.

Roc, a Sydney investment firm, has taken on Macquarie Group, which has investments in more than 4.8 million hectares of farmland across 31 countries and is looking to expand its portfolio by taking over Vitalharvest.

Vitalharvest – which owns the farmland where Australia’s biggest fruit and vegetable wholesaler, Costa Group, grows its produce – has backed Macquarie’s bid in the absence of a superior offer. But the listed trust company has baffled investors by seeking to end the fierce bidding war to take control of its assets.

The battle between Roc and Macquarie has seen bidding for Vitalharvest rise from $1 to $1.28 a share — valuing it at more than $350 million — plus a 2.5c dividend. And Roc is understood to be weighing an even sweeter offer.

It is understood that the Australian Securities & Investments Commission has weighed into the tussle for the group after it imposed a deadline on the bidding.

While investors are keen to see the bidding continue to extract maximum value for Vitalharvest, the trust company appears to want to settle the takeover before the end of the financial year.

The reason is that if a deal is pushed out beyond June 30, investors could argue that they are en­titled for another dividend off the past six months’ earnings.

Macquarie has already agreed to pay the 2.5c dividend to shareholders from the rent received until December 31 and it is understood not to be keen to pay another potential dividend for the past six months if a deal is settled next financial year.

In a statement, Vitalharvest said: “If Roc proposes to make a further offer, it provides this by May 26 to allow time for any further offer or counter-offer before” a meeting of Vitalharvest unitholders on June 10.

Vitalharvest says it won’t delay the unitholder meeting again, after it was postponed from May 12 to June 10, even if Roc comes up with a better bid.

“If there are further changes to the transaction which are positive from the perspective of VTH unitholders, such as an increase in the consideration, and VTH considers it to be in the best interests of VTH unitholders at that time, it expects to provide any update via an ASX announcement, rather than by delaying the meeting and dispatching a further supplementary scheme booklet,” it said.

Macquarie could have bought Vitalharvest before it listed on the ASX in August 2018. It was given the chance to buy the trust but The Australian understands it offered $232 million – below the $300 million Vitalharvest wanted.

This year, Macquarie looked set to finally pay the asking price, but it had some unexpected competition. Earlier this year, Roc launched its Agri Infra Fund, and was on the hunt for new assets.

In February, it lobbed a cash bid of $1.08 per unit – valuing Vitalharvest at $315 million – trumping Macquarie’s then offer of $1 per unit. The move appeared timed to derail the well-advanced play by Macquarie.

For Costa Group, it represented an unknown player, and the company has since gone out of its way to back Macquarie, because its proposal features fixed price rent, scrapping the clause in which Costa must share 25 per cent of its berry and citrus profits with Vitalharvest.

The irony is Costa, under then chief executive Harry Debney, drafted the lease agreement, including the profit-sharing clause. Since then, a 125g box of fresh blueberries has soared from $2-$3 to $7.50, frustrating the wholesaler, which has been forced to pay a greater price for the land it leases.