Costa Group Announces Acquisition Agreement with PSP-Led Consortium

Overview Costa Group Holdings Limited (ASX: CGC), a leading Australian fresh fruit and vegetable producer, has revealed its entry into a Scheme Implementation Agreement (SIA) with a consortium led by Paine Schwartz Partners, LLC (PSP) for the acquisition of all outstanding Costa shares. This acquisition, valued at AU$3.20 per share, has gained unanimous approval from Costa's board and marks a significant development in the company's growth strategy. Here are the key highlights and details:

The Consortium

The PSP-led consortium includes entities controlled by PSP, Driscoll’s Inc, and British Columbia Investment Management Corporation. Together, they currently hold approximately 19.62% of Costa shares.

Scheme Consideration

Under the agreement, Costa shareholders are set to receive $3.20 per share in cash, which values Costa's equity at about AU$1,496 million and an enterprise value of approximately AU$2,459 million. This represents substantial premiums to various benchmarks, including a 43% premium to the closing share price on October 25, 2022.

Board Recommendation Costa's board of directors unanimously supports the scheme as being in the best interests of shareholders. They recommend shareholders vote in favor of it, subject to the absence of a superior proposal and continued endorsement from an independent expert.

Implementation Timeline

The scheme's implementation is expected to occur in the first quarter of 2024, subject to several conditions, including shareholder approval and regulatory clearances.

Scheme Implementation Agreement

The SIA outlines various conditions, including the issuance of an independent expert's report, approval from regulatory bodies, and approval from Costa shareholders. There is no financing condition, and the SIA includes termination rights for both parties.

Next Steps

Costa shareholders will receive a Scheme Booklet containing details of the acquisition, the reasons for the board's recommendation, and an independent expert's report. Shareholders will then have the opportunity to vote on the scheme at a shareholder meeting.

About Costa

Costa Group Holdings Limited is a leading Australian fresh produce company, specializing in categories such as berries, mushrooms, glasshouse tomatoes, citrus, and avocados. With operations across Australia and strategic international ventures, Costa is a major player in the global fresh produce market.

This acquisition agreement with the PSP-led consortium signifies an important step for Costa as it continues to expand and strengthen its position in the industry. Shareholders will have a critical role in determining the future of the company as they vote on the scheme's approval in the coming months.

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