AUSTRALIA – Costa Group Holdings Ltd, Australia’s leading integrated fresh produce company, has accepted the acquisition offer of USD 960 million from Pain Schwartz Partners (PSP).
The decision to enter into a Scheme Implementation Agreement was announced by Costa Group on 22 September.
The PSP-led consortium consists of entities controlled by PSP, Driscoll’s, and British Columbia Investment Management Corporation.
Entities affiliated with PSP and Driscoll’s collectively hold approximately 19.62% of the currently issued Costa shares.
The agreement will see the consortium acquire the remaining Costa shares at A$3.20 (USD 2.30) per share, valuing Costa’s equity at approximately A$1.496bn (USD 1.091 billion).
The purchase comes just one week after Costa Group downgraded its earnings forecast, causing its shares to plummet by 15% to approximately USD 2.
Additionally, on August 24, Costa Group announced that it anticipated a decline in the quality of citrus in the later part of the season.
The forecast is expected to have a negative impact of approximately A$30 million on the full-year EBITDA-S (stock-based compensation).
Notably, this investment is not a first-time PSP venture on Costa Group. PSP invested in Costa Group in July 2011 when the company was still known as Paine & Partners.
After making additional investments in the company, Paine & Partners took Costa public on the ASX in July 2015.
In October 2022, Paine Schwartz acquired a 13.78% stake in Costa at AUD 2.60 per share. Subsequently, in March of this year, the stake was increased to 14.84%, which paved the way for formal discussions regarding a buyout bid in April.
Costa expects this current deal to be completed in the first quarter of 2024, subject to approval from shareholders and regulatory bodies.
Each Costa director intends to vote in favor of the scheme for all the Costa shares that he or she holds or controls, subject to the same qualifications, the board said.
“The board is always committed to acting in the best interests of shareholders. With this firmly in mind, it carefully considers a range of factors when making its recommendation,” said Neil Chatfield, Chairman of Costa.
“This included several different valuation scenarios, potential risks related to the future execution of Costa’s business growth plan, and the potential trading price of Costa shares over the medium to longer term if it continues as an independent listed company.”
Costa Group Holdings Ltd (Costa Group Holdings), which specializes in the production, packaging, and marketing of fresh fruits and vegetables, is confident that PSP, a private equity firm specializing in sustainable food chain investing, is acting in their best interest.
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