Costa Group Holdings has accepted a revised and lower takeover bid from a consortium led by private-equity investor Paine Schwartz Partners. The deal, struck through a so-called scheme implementation agreement, values Costa Group’s equity at A$1.5bn and amounts to an enterprise value of about A$2.5bn. Shareholders outside of the consortium-led takeover group now have to vote on the transaction. If approved, the deal is expected to be completed in the first quarter of next year.
In the same week that New York-headquartered Paine Schwartz Partners (PSP) and associates cut a previous offer from A$3.50 a share to A$3.20, the board of the Australia-based fresh fruit and vegetables grower and supplier have bowed.
PSP’s investment partners, including California-based fruit grower and retailer Driscoll’s and Canada’s British Columbia Investment Management Corp, hold a 19.6% stake in Costa Group.
The Costa board has unanimously recommended that Costa shareholders vote in favour of the Scheme, subject to the various customary conditions. The deal provides certainty for shareholders in an uncertain operating environment by delivering cash proceeds to shareholders at an attractive premium.
In 2017, Costa Group acquired a controlling interest in Morocco-based blueberry grower and supplier African Blue. That tie-up built on a similar berries partnership struck the previous year in China with Driscoll’s, in which Costa Group is also the majority shareholder.
Through its joint ventures, Costa Group operates six blueberry farms in Morocco and four berry facilities in China.
The statement said the deal needs approval from the Chinese State Administration for Market Regulation, the Moroccan Competition Council, the European Commission, and Australia’s Foreign Investment Review Board.
Costa Group’s shares closed the Australian trading day almost 7% higher at A$3.09. In the financial year to 1 January, Costa Group posted revenue of A$1.4bn, an increase of 11.2%. EBITDA rose 12.8% to A$223.5m while net profit attributable to shareholders fell 7.8% to A$33.6m. Net profit was also down in the first half of Costa Group’s new financial year, with the after-tax figure declining 6.2% to A$37.8m.
For the half-year period to 2 July, revenue increased 8.7% to A$770.7m, while EBITDA was up 7.2% at A$150.2m.
