Costa Group Holdings has entered a due diligence process with Paine Schwartz Partners after the investor submitted a takeover offer for the Australian fresh produce business.
The New York-headquartered private-equity firm already owns 13.8% of the fresh-produce group, a stake acquired in October last year. Costa Group Holdings confirmed Paine Schwartz Partners (PSP) put forward an “unsolicited, confidential, non-binding indicative proposal” for the remaining shares at the end of May.
After an initial four-week due diligence period, the Costa Group Holdings board agreed to grant PSP a further eight weeks from 6 June to decide “whether to put forward a binding proposal”, the Sydney-listed company said in a stock-exchange filing today (4 July).
“The indicative proposal (as reconfirmed) is subject to a number of conditions including satisfactory completion of due diligence, execution of a binding scheme implementation agreement and approval of the PSP Investment Committee,” Costa Group Holdings added.
Australia’s Foreign Investment Review Board, the country’s investment gatekeeper, has approved the potential transaction. However, that approval “may be required to be refreshed upon finalisation of any co-investors”, Costa Group Holdings said.
The company is engaged in growing and supplying berries, mushrooms, glasshouse tomatoes, citrus and avocados, cultivated across 7,200 hectares of farmland in Australia. It also operates 40 hectares of greenhouses and runs three mushroom farms.
Outside of Australia, the company has majority interests in joint ventures, including six blueberry farms in Morocco and four berry facilities in China.
The cash consideration in the proposed takeover amounts to A$3.50 ($2.33) a share, a premium over the A$2.60 paid by PSP in October. The shares closed at A$3.34 in Sydney today, up almost 13%.
In the financial year to 1 January, Costa Group Holdings 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.
