Roc squishes Macquarie’s berry farm takeover play

The agricultural trust has become the unlikely scene of a takeover battle for $300m of farms.

Vitalharvest owns a portfolio of berry and citrus farms in NSW, SA and Tasmania, which are leased to Costa Group.

Investment group Roc Partners has crashed a takeover play by investment bank Macquarie’s asset management unit for the Vitalharvest Freehold Trust, which owns berry farms leased to Costa Group, setting the scene for a bidding war.

Roc on Friday lobbed a cash bid at $1.08 per share – a premium to Macquarie‘s $1 per share offer – that would see it pay about $315m for the berry farms if successful.

Macquarie had support from trust manager Primewest, which had committed the bulk of its 19 per cent stake into the bid via option agreements but a takeover contest has now broken out.

The move appears timed to derail the well-advanced play by Macquarie Infrastructure and Real Assets for the Vitalharvest. Its move on the trust had been dubbed “fair and reasonable” by independent expert Grant Thornton and was set to go to a meeting on March 4.

The independent board was also supporting the bid, subject to a superior offer, and Roc says that it is making a highly compelling proposition and that offers superior value.

Vitalharvest owns a portfolio of berry and citrus farms in NSW, SA and Tasmania, which are leased to Costa Group.

Roc is well credentialed to take Macquarie on and manages more than $7.1bn worth of assets around Asia.

It has poured capital into food and agriculture investments and has more than $1.3bn invested in the area and has bought companies including Emerald Grain, Australia’s largest chicken broiler farmer ProTen and fresh produce operators Flavorite Group.

Roc said it had commitments from lenders Rabobank and the Commonwealth Bank to fund its bid and equity funding from its Roc Agri+ Infrastructure Fund, that is in the final stages of completing an equity commitment from one of Australia’s largest superannuation funds.

Roc has tapped Kidder Williams as financial adviser.

Independent expert Grant Thornton had concluded the Macquarie scheme was in unitholders’ best interests, and valued the Vitalharvest Freehold Trust units at between 97c and $1.11.

Grant Thornton had said if the scheme was not implemented, a planned $300m asset sale to MIRA, was also fair and reasonable.

But both these Macquarie plays are effectively trumped by the Roc offer, putting pressure on the bank to come back with a higher bid.

Trust units jumped 6c to $1.06 in early morning trade.

Macquarie has previously spruiked its offer as good value with Liz O’Leary, head of MIRA Agriculture, saying the cash consideration and interim distribution were at a “very significant” premium to where the units were trading prior to the bank’s offer.

“The transaction is strongly aligned with MIRA’s proven investment strategy of deploying long term capital to support high quality agricultural operators and investment grade assets,” Ms O’Leary said.

In the first half the trust generated Funds From Operations of $9.72m and on a per unit basis FFO rose from 3.62c to 5.26c per unit.