Costa board accepts $1.4b takeover offer from Paine Schwartz, Driscoll’s and BCI

Costa board accepts $1.4b takeover offer from Paine Schwartz, Driscoll’s and BCI

Costa Group's Delight blueberry variety, which is grown by the company in Far North Queensland. 

One of Australia’s largest fruit and vegetable producers, Costa Group Holdings (ASX: CGC), has announced today it is accepting a $1.49 billion takeover offer from a consortium led by private US equity firm Paine Schwartz Partners (PSP).

The approved $3.20 a share deal comes after months of negotiations with the suitor, which slashed its initial $1.6 billion offer after Costa revealed underlying profit for the full year would take a $30 million hit due to unfavourable growing conditions.

If the deal overcomes regulatory hurdles, it will see the consortium snap up the remaining 85.16% stake it does not already own. Led by PSP, the consortium also comprises entities controlled by the world's largest berry company Driscoll's Inc and the British Columbia Investment Management Corporation (BCI).

The Costa board has unanimously recommended that shareholders vote in favour of the scheme, in the absence of a superior proposal and subject to an independent expert review.

“The board is committed at all times to acting in the best interests of shareholders and with this firmly in mind, carefully considered a range of factors in arriving at its recommendation,” Costa Group chairman Neil Chatfield said.  

“This included a number of different valuation scenarios, potential risks relating to the future execution of Costa’s business growth plan, and the price at which Costa shares could trade over the medium to longer term if it continues as an independent listed company.

“Accordingly, the Costa board has unanimously recommended that Costa shareholders vote in favour of the scheme, subject to the various customary conditions.”

Founded in 1937, Costa Group is a large grower of berries, citrus fruit, mushrooms, avocadoes and tomatoes. It currently operates more than 7,200 hectares of farmland in Australia, in addition to operating facilities in Morocco and China. The company also exports 10 per cent of its produce to North America, South America, Europe and Asia.

For the deal to go ahead, it will require approval from multiple regulators, including the Chinese State Administration for Market Regulation, the Moroccan Competition Council, and the European Commission.

PSP showed its intentions for a takeover of Costa Group in May this year when it issued an unsolicited, confidential, non-binding indicative proposal to acquire all of the shares in Costa it didn’t already own. PSP had previously snared a 13.78 per cent stake in Costa on 25 October 2022.   

However, the US investor has been involved in the Costa Group journey for much longer than that, having been a majority owner of the company prior to its 2015 initial public offering (IPO) on the ASX with its first equity stake acquired in 2011, back when its name was Paine + Partners.

Subject to conditions being met, implementation of PSP’s latest deal with Costa Group is expected to occur in the first quarter of 2024.

Enjoyed this article?

Don't miss out on the knowledge and insights to be gained from our daily news and features.

Subscribe today to unlock unlimited access to in-depth business coverage, expert analysis, and exclusive content across all devices.

Support independent journalism and stay informed with stories that matter to you.

Subscribe now and get 50% off your first year!

Four time-saving tips for automating your investment portfolio
Partner Content
In today's fast-paced investment landscape, time is a valuable commodity. Fortunately, w...
Etoro
Advertisement

Related Stories

TrueState raises $1.5m towards AI app template platform

TrueState raises $1.5m towards AI app template platform

Sydney-headquartered artificial intelligence (AI) app template star...

Sushi Sushi catches a new fish with Sushi Musa acquisition

Sushi Sushi catches a new fish with Sushi Musa acquisition

One of Australia's leading quick service retail (QSR) food chai...

Crypto platform Block Earner not out of the woods as ASIC appeals court ruling

Crypto platform Block Earner not out of the woods as ASIC appeals court ruling

Cryptocurrency trading app Block Earner has been brought back into ...

South Australian family company Detpak to export compostable foodservice packaging

South Australian family company Detpak to export compostable foodservice packaging

A family-owned South Australian packaging group with around 3,000&n...