Costa delays dividend call with takeover offer up in the air

afr.com:

Costa Group will keep shareholders in the dark about a potential dividend payment and the outcome of takeover discussions with private equity firm Paine Schwartz Partners for at least another fortnight.

The company, Australia’s biggest horticultural group, posted delayed half-year results on Thursday and said a late start to the citrus season meant most earnings would fall into the second half of the year and forecast the crop would suffer a $30 million hit from weather-related problems.

The future of a takeover offer from the New York private equity firm pitched at $3.50 a share in May also remains unclear. Costa said on Thursday it was uncertain any deal would go ahead and at what price if it did. The company said it expected to update the market in mid- to late September.

Costa says weather-related issues are affecting the yield and quality of its produce. 

In the meantime, the board has opted to hold back making a call on any interim dividend to shareholders.

Costa chief financial officer Wayne Johnson told analysts who had anticipated a dividend that a decision had been deferred pending a potential binding offer from Paine.

“We don’t have that binding proposal and, as implied by the ASX release and today’s commentary, we may not receive a binding proposal. We’ll have to see how that plays out,” he said.

“The board will consider a dividend at the appropriate time. There is no hidden message other than … it is appropriate for us to see if there was to be a binding proposal come and the structure of that proposal before we consider what we do in relation to a dividend to the shareholders.”

Paine, which floated Costa in 2015, acquired an almost 14 per cent stake in Costa last October at $2.60 a share, and started talks