Crop that! Costa in final takeover talks with private equity investor

afr.com:

Costa Group, the country’s largest horticultural company, is set to call time on the ASX with the board on track to recommend a takeover offer from New York private equity firm Paine Schwartz Partners as early as this week.

Advising Paine, which floated Costa in 2015, is Citi and Allens while Costa has engaged UBS and King & Wood Mallesons. While a transaction was yet to be signed as of Monday, sources on both sides were hopeful of an agreed deal in coming days.

Costa is one of the largest fruit and vegetable producers in Australia. 

As first reported by Street Talk in October, Paine made a surprise return to Costa seeking to acquire 15 per cent. Even then, it was unlikely the firm, which specialises in agribusiness investments, would stay on the sidelines. And it appears they have landed a deal with the Costa board.

Costa shares are down more than four per cent in the last 12 months, and were trading at around $2.80 on Monday. That gave the fruit and vegetables producer a market capitalisation of around $1.3 billion.

Its co-founder, Frank Costa, died in 2021 at the age of 83. Costa was a prominent Victorian businessman best known for saving the Geelong Football Club from financial collapse in the late 1990s.

Paine, with the assistance of Citi, eventually took a near 14 per cent stake in Costa in October at $2.60 per share, at the time a 16.6 per cent premium. A term sheet circulated at the time noted that the acquirer had “no current intention of making an offer to acquire control” of Costa. Paine, formerly known as Paine & Partners, increased its stake to 14.8 per cent in March. All up Paine has paid up $174 million for that stake at an average of $2.52 per share. Costa was listed on the ASX at $2.25 per share.

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