Costa Group Holdings said on Tuesday it had received a A$1.4 billion ($934.50 million) takeover proposal from U.S. private equity firm Paine Schwartz Partners LLC (PSP) for shares it doesn’t already own in the horticulture company.
Shares in Costa – Australia’s biggest citrus fruits grower and one of the country’s biggest berry producers – jumped 9.8% to A$3.25 in early trade.
Under the proposal, Costa’s shareholders would receive A$3.50 apiece, reflecting a premium of 34.6% to the price PSP paid in October.
Shares in Costa closed up 8.8% on Monday after local media reported that Costa was in takeover talks with PSP, which specializes in sustainable food chain investing.
PSP acquired a 13.8% stake in the company at A$2.60 per share in October last year. It currently holds 14.8% stake in Costa.
Following a four-week period of initial due diligence, PSP provided re-confirmation of the indicative proposal on July 4, Costa said.
Further due diligence and negotiations on a potential scheme implementation agreement are expected to continue through July, it added.
PSP has indicated that they have received approval from Australia’s Foreign Investment Review Board (FIRB) to acquire Costa, however such approval may be required to be refreshed upon finalisation of any co-investors, Costa added.
Listed on the ASX in 2015, Costa is Australia’s leading grower, packer and marketer of fresh fruit and vegetables. It produces avocados, bananas, mushrooms, berries, citrus fruits, among others.
The company had reported a decline in its earnings for fiscal 2022, impacted by difficult weather conditions. But based on a trading update provided in May, Costa expects favourable market demand for its citrus in this season.
PSP did not immediately respond to a Reuters request for comment.
($1 = 1.4986 Australian dollars)
Reuters