Costa’s update to the market last week has again put the spotlight on Driscoll’s and a possible buyout of the $1.1bn company.
Paine Schwartz Partners has a 14.84 per cent interest in Costa, and as reported by DataRoom, there were suggestions it had been considering a buyout with berry grower Driscoll’s in 2020.
Before Costa listed in 2015, there were suggestions that Driscoll’s had come close to buying it.
California-based Driscoll’s is a family-owned berry seller with an annual turnover of between $500m and $1bn and a strong global brand.
In recent years, it has controlled about a third of the $US6bn US berry market, developing proprietary breeds of berries and licensed them exclusively through approved growers.
Costa’s intellectual property in blueberries would appeal to Driscoll’s, which already has a partnership with Costa for the China market.
Buying Costa would enable Driscoll’s to market its Moroccan-grown blueberries through Europe without Costa paying royalties.
Paine Schwartz Partners, a private equity firm, has bought shares at up to $2.60 through investment bank Citi. On Friday, Costa’s shares closed at $2.64.
Paine & Partners owned Costa along with the founders before Costa was listed at $2.25 a share in 2015, equating to a $717m market value.
Costa’s share price had been under severe pressure after flooding damaged its citrus crops, a glut of avocados forced prices down, and labour costs rose.
Its market update last week flagged improving conditions and easing cost pressures.
International earnings, which are heavily weighted to the first half, are expected to increase on the previous corresponding period, but performance is mixed across categories.
Analysts at Wilson’s have a 12-month price target on the stock of $2.44.
Costa is Australia’s largest grower, packer and marketer of fresh fruit and vegetables, supplying produce to supermarket chains as well as independent grocers and a range of food industry stakeholders.
The business also exports to Asia, North America and Europe, growing produce including berries, mushrooms, tomatoes, citrus, table grapes, bananas and avocados.
Goldman Sachs well placed with Real Pet Food sale imminent
Investment bankers have recently entered a beauty parade in the hope of landing the job of selling the pet food company.
KKR weighing up $8bn office landlord Dexus
Blackstone weighed up another bid for the real estate and infrastructure group last year, and now its major private equity rival is said to have been looking.