Macquarie emerges victorious in Vitalharvest battle after knocking out smaller rival

Instead of seeking to outbid Roc Partners in Vitalharvest battle, Macquarie Bank bought more shares to vote out the investment minnow.

Vitalharvest owns Costa Group’s blueberry picking at Corindi as well as the company’s citrus orchards.

Roc Partners’ attempt to gazump Macquarie Bank’s bid for Vitalharvest has sparked an offensive from the “millionaires factory”, with the investment bank using its clout to swat any further bids from its smaller rival.

And it worked. On Friday, Roc bowed out of the race to take over Vitalharvest, which owns the land Costa Group grows its citrus and berries on.

It was the culmination of a fierce battle between Macquarie and Roc, which saw bidding rise from $300m to almost $360m.

While Macquarie didn’t offer more than Roc — matching the Sydney investment firm at $1.33 unit — it instead bought an extra 8.7 million Vitalharvest shares, lifting its stake by 4.7 per cent to 21 per cent.

Macquarie declared it would use its shareholding to reject a Roc offer in the event of a unitholder vote.

In other words, if it can’t outbid Roc, it will vote it out.

Earlier in the week, Roc sought to land a knockout punch, overbidding Macquarie by 3.5 cents a unit. This compares with Macquarie seeking to outbid Roc last week by lifting its offer by 0.5c to $1.295 a unit.

Had Macquarie outbid Roc, it would have triggered a clause involving Roc to lift its bid by at least 1c — which Macquarie labelled an infinity bid. And already, Roc’s interest in Vitalharvest has led to bidding soaring from $300m to almost $360m.

Putting the brakes on any further bids is important for Macquarie, given it has agreed to a fixed price rent deal from Costa if it takes over Vitalharvest. Roc on the other hand, will maintain the current profit sharing agreement, in which Costa pays 25 per cent of the profits from its citrus and berry farms to Costa.

Unlike Roc’s proposal, Macqaurie will not ride the highs of the market, arguing that fixed price rent will smooth out the notorious risks associated with primary production. Costa Group is also keen to end the profit sharing agreement, given the price of berries has soared in the past three years from $2-3 for a 125g punnet to $7.50.

But fixed rent also means that Macquarie’s yield dwindled with every cent it bids more than Roc. It had to draw an end to the bidding.

Vitalharvest’s board unanimously recommended that unit holders vote in favour of Macquarie’s offer on Friday.

“Vitalharvest RE has also been informed by Roc that it does not currently intend to provide any further offer above its existing offer (the ninth roc offer dated June 7). Vitalharvest RE engagement with Roc has now ceased.”