Paine Schwartz slices more than $100m from Costa Group bid
Paine Schwartz Partners has cut the amount it is prepared to pay for Costa Group, Australia’s largest fruit and vegetable processor.
The New York-headquartered buyout firm sliced an original offer of $3.50 per share, made in May, to $3.20 per share after due diligence and accounting for Costa’s weaker profit outlook and a $30 million hit from adverse weather conditions. The new offer values Costa at $1.49 billion.
The Costa board is reviewing the lower offer and said it was continuing to hold talks with Paine Schwartz about terms and conditions. It is still assessing whether the new offer is in the best interests of shareholders.
Costa says weather-related issues are affecting the yield and quality of its produce.
Costa is a large grower of berries, mushrooms, citrus fruit, tomatoes and avocados. It operates 7200 hectares of farmland in Australia, and also has facilities in Morocco and China.
Costa told shareholders on Monday that Paine Schwartz had signalled that the new bid was the highest it would make.
“PSP has also indicated that this offer is the best and final price at which the PSP-led consortium can deliver the proposed transaction,” the company said. The $3.20 per share may be reduced further depending on whether the Costa board decides to pay a dividend of up to 4¢ per share.
Paine, which floated Costa in 2015, acquired an almost 14 per cent stake in Costa last October at $2.60 a share, and began discussions in April about a takeover offer in the range of $3.20 to $3.30 a share. It followed with a non-binding proposal at $3.50 a share in May that valued Costa at $1.6 billion.
Costa at its half-year results on August 31, said a late start to the citrus season meant most earnings would fall into the second
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