The Smorgon family-backed fruit and vegetable grower Perfection Fresh is understood to have hired investment bank Goldman Sachs for a sale of the business.
The sales process for the business is yet to swing into action, but it is believed that private equity firms will likely line up for the operation.
The company owns and runs farms around Australia, growing a range of fruits and vegetables and is owned by members of the wealthy Smorgon Family along with Canadian pension fund PSP and the founders.
Some believe it could sell for as much as $400 million.
Among those that could be contenders are Roc Partners, which is taking on Macquarie Infrastructure and Real Assets in its effort to buy Costa’s landlord, Vitalharvest Freehold Trust.
Roc last offered $329.6m for that business.
Kohlberg Kravis Roberts has previously invested in Australian horticulture, putting money into tomato producer and greenhouse owner Sundrop Farms.
Another potential suitor is Quadrant.
Some analysts also believe that the New Zealand listed horticultural company Scales Corp may take a look after confirming to the market on March 23 that it is bidding for NZ wine company Villa Maria.
While the Costa Group is considered a logical acquirer, sources close to the company say it is not currently considering an acquisition of Perfection Fresh, with it mostly focused on organic growth right now.
Established in Sydney in 1978, Perfection Fresh maintains relationships with supermarkets through vertical integration with farms.
It also has operations in packaging and wholesaling
IBISWorld says Perfection Fresh has a market share in Australia of 5 per cent, like Costa.
Based in Sydney, Perfection Fresh was established in 1978.
Its operations include a range of company-owned and family farms and several joint ventures.
In 2015, the Perfection Fresh purchased the Moraitis tomato business and as a result now controls a significant share of the nation’s tomato market.
It also purchased the sales and marking rights to Calypso mangoes in 2016 and Queensland-based Berry Yummy Marketing in 2019.
Perfection Fresh now accounts for about a third of mango sales and a tenth of strawberry sales throughout Australia.
Goldman Sachs is working on the sale after it has also won the mandate to assist the Australian grocery chain Harris Farm with a partial sale of its business.
Some expect the family-owned company to be worth about $1bn.
Harris Farm has 27 stores in NSW and makes more than $500m in revenue at a time that shoppers are increasingly choosing organic and more naturally produced produce over that sold at supermarkets.
The NSW fruit and vegetable retailer is estimated to generate at least $50m of earnings before interest, tax, depreciation and amortisation.
While Woolworths, Coles and Metcash are thought to be keen on the business, the challenge for the rivals would be gaining clearance for an acquisition from the Australian Competition and Consumer Commission.
Private equity firms would also likely be eager suitors.
Coal price not right as Kestrel mine owners seek $4.8bn pay dirt
The owners of the Kestrel coal mine will have to convince buyers to pay about $4.8bn for the mine, but the coal price has fallen about 20 per cent since it was first set to hit the market.
St John of God in discussions over Healthscope leases
The not-for-profit St John of God Health Care has discussed with Healthco Healthcare and Wellness REIT taking over some real estate leases from tenant Healthscope.