Costa Group Holdings, a prominent player in the food and beverage industry, has recently initiated a due diligence process with Paine Schwartz Partners (PSP) following the submission of a takeover offer. PSP, a New York-based private-equity firm, has already acquired a 13.8% stake in Costa Group Holdings since October of last year. In May, the firm presented an unsolicited, confidential, and non-binding indicative proposal for the remaining shares.
Subsequently, Costa Group Holdings’ board agreed to grant PSP an additional eight weeks, starting from June 6, to evaluate whether to put forward a binding proposal. The indicative proposal, subject to various conditions such as satisfactory completion of due diligence, execution of a binding scheme implementation agreement, and approval of the PSP Investment Committee, has received initial approval from Australia’s Foreign Investment Review Board.
The cultivation and supply of berries, mushrooms, glasshouse tomatoes, citrus, and avocados across 7,200 hectares of farmland in Australia, along with 40 hectares of greenhouses and three mushroom farms, lies at the core of Costa Group Holdings’ operations. Furthermore, the company holds majority interests in joint ventures, including six blueberry farms in Morocco and four berry facilities in China.
PSP has proposed a cash consideration of A$3.50 ($2.33) per share for the remaining stake, representing a premium compared to the A$2.60 price PSP paid in October. The company’s shares closed at A$3.34 in Sydney today, reflecting a nearly 13% increase.
In the financial year ending January 1, Costa Group Holdings achieved a revenue of A$1.4bn, exhibiting a growth rate of 11.2%. Meanwhile, EBITDA increased by 12.8% to A$223.5m, although net profit attributable to shareholders experienced a slight decline of 7.8% to A$33.6m.