Paine Schwartz wins over Costa board with cut-price $1.5b offer

afr.com:

The board of Australia’s largest fruit and vegetable company, Costa Group, has agreed to a cut-price $1.5 billion takeover offer from a consortium headed by private equity firm Paine Schwartz Partners.

The Costa board said the certainty of a cash offer in an uncertain operating environment meant the reduced offer of $3.20 a share was the best outcome for shareholders in the absence of any higher offer. The acceptance was first flagged by The Australian Financial Review’s Street Talk column on Thursday.

Costa Group is a big processor of mushrooms, avocados, tomatoes, berries and citrus fruit.  

The New York-headquartered buyout on September 18 sliced $100 million from an original offer made in May. It was cut from the original $3.50 a share price to $3.20 a share after two months of due diligence and accounting for Costa’s weaker profit outlook and a $30 million hit from adverse weather conditions.

Costa is a large grower of berries, mushrooms, citrus fruit, tomatoes and avocados. It operates 7200 hectares of farmland in Australia, has facilities in Morocco and China and has been listed on the ASX since 2015. Shares were as high as $6.90 in late 2018.

Costa chairman Neil Chatfield said on Friday that the board still believed the company had solid fundamentals, but the cash offer had outweighed those longer-term considerations.

“While the Costa board has confidence in the long-term fundamentals of the company, the scheme provides certainty for shareholders in an uncertain operating environment by delivering cash proceeds to shareholders at an attractive premium,” he said.

Mr Chatfield said the board had weighed up many factors. “This included a number of different valuation scenarios, potential risks relating to the future