Corrigan’s $724m Webster deal

Webster shares soared as Chris Corrigan prepared to sell his stake in the nut grower at a premium after its takeover.

Chris Corrigan has chaired Webster since 2016 Picture: Britta Campion

Waterfront warrior Chris Corrigan is poised to sell out of his listed agribusiness interests at a hefty premium after Canadian giant PSP Investments swooped on nut grower Webster in a $724m takeover deal.

Mr Corrigan, who chairs the ASX stalwart, will sell his 12.5 per cent stake in Webster but emerge with an interest in a smaller venture alongside PSP Investments if the deal goes ahead.

The $90m exit from the company caps a distinguished and controversial career for Mr Corrigan, who headed stevedore company Patrick during the 1998 waterfront dispute.

He has been involved in Webster for more than a decade, investing well ahead of the boom in the value of agricultural assets. Mr Corrigan joined Webster’s board in 2007 and has chaired the company since 2016.

The latest Australian firm to be snapped up by Canadian interests, Webster has struck a scheme implementation agreement with PSP Investments that will see the pension fund buy out Webster at $2 in cash per share. Webster’s stock jumped on Thursday to close at $1.94.

The offer for the walnut, almond and farming company came at a premium of 57 per cent to Wednesday’s closing price and 60 per cent to the 30-day trading of Webster shares.

Webster preference shareholders will be offered $2 per preference share via a separate deal. The share deal and preference share scheme imply a market capitalisation for Webster of about $724m and an enterprise value of about $854m.

Mr Corrigan will sell his holdings into the scheme and non-conflicted Webster directors David Cushing and Maurice ­Felizzi will recommend it, subject to the usual caveats of an independent expert report and no superior proposal emerging.

The deal will be completed in the first quarter of 2020.

Webster is one of the country’s most powerful water rights companies and has long put much stock in this aspect of its operations, some of which will be transferred into a new venture Mr Corrigan will take an interest in alongside PSP Investments.

The company is also a top agribusinesses, operating walnut and almond orchards in NSW and Tasmania, and also running cotton and other annual crops, and cattle and Dorper sheep production.

The company also oversees a bee venture in NSW.

The deal comes about a month after Ruralco shareholders overwhelmingly voted in favour of a $469m takeover by Canadian fertiliser giant Nutrien, which already owns the Landmark brand in Australia.

Harvested walnut pods at Webster’s Walnuts Australia farm near Leeton, NSW.

The ACCC last month also approved Elders’ proposed $187m takeover of Australian Independent Rural Retailers, but the watchdog said it was closely monitoring increasing consolidation in the nation’s drought-affected rural sector.

PSP Investments invests funds for the pension plans of the Canadian Federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Forces.

PSP’s natural resources group invests globally in agriculture, timberland and related opportunities.

PSP Investments already owns 19.1 per cent of Webster’s shares.

If the scheme goes ahead, Webster will transfer select assets to a separate, newly formed PSP Investments entity for a value of $276.7m plus the net working ­capital.

These assets comprise its Kooba and Hay properties, its southern grazing stock and business, the apiary business and certain related water entitlements.

Mr Corrigan’s Belfort Investment Advisors and David Fitz­simons’ Verolot Limited will be offered the chance to acquire a 50.1 per cent ownership interest in this venture if the scheme goes through.

Belfort and Verolot own 12.5 per cent and 10.7 per cent respectively of Webster’s shares and both directors can vote on the scheme.

At its half-year results released in May, Webster warned that due to continued drought conditions affecting all areas of production and lower than expected walnut production and pricing, it expected to record a near-break even position for the full year to the end of September.

Webster chief executive Mr ­Felizzi said the proposed deal with PSP was an attractive value for Webster shareholders.

“In assessing the proposed transaction, the non-conflicted ­directors considered Webster’s revenue and earnings profile, the current value of its underlying assets and concluded that the offer from the PSP bid provided ordinary shareholders with the opportunity to immediately realise a significant premium to the share price without the inherent risks ­associated with agricultural enterprises,” ­Mr Felizzi said.

“We also concluded that ­Webster and PSP Investments have complementary, long-term growth aspirations, making PSP Investments a logical and suitable owner of the Webster asset portfolio.”