Costa Groups Strategic Move: Acquisition and Scheme Update

Costa Group Holdings Limited (ASX: CGC) has made a significant strategic move by entering into a Scheme Implementation Agreement with a consortium led by Paine Schwartz Partners, LLC (PSP). This marks the initiation of the acquisition of all outstanding shares not already owned by the Consortium.

Here are the key highlights of this strategic development:

1. Scheme Implementation Agreement

Costa officially entered into a Scheme Implementation Agreement (SIA) with the consortium led by PSP. The acquisition will involve all issued shares in Costa that the Consortium doesn't already own, with a cash offer of $3.20 per share. This move reflects PSP's keen interest in the agribusiness sector.

2. Key Scheme Highlights

• Scheme Consideration: Shareholders are set to receive $3.20 per share as part of the Scheme Consideration, valuing Costa's equity at approximately $1,496 million.
• Board's Support: The Board unanimously supports the scheme, contingent on an independent expert consistently deeming it in the best interest of shareholders.
• Approval Process: The scheme is subject to approval by Costa shareholders at a Scheme Meeting and regulatory approvals.

3. Premiums and Board's Recommendation

• Scheme Consideration Value: The $3.20 per share Scheme Consideration values Costa's equity at around $1,496 million and an enterprise value of approximately $2,459 million.
• Premium Offered: Premiums of 43%, 23%, 18%, and 25% are offered concerning various historical share prices.
• Board's Firm Recommendation: The Costa Board firmly recommends shareholders vote in favor of the scheme, provided there's no superior proposal and an ongoing endorsement from an independent expert.

4. Implementation Conditions

• Regulatory Approvals: Conditions for the Scheme include approvals from the Foreign Investment Review Board, Chinese State Administration for Market Regulation, Moroccan Competition Council, and the European Commission.
• Shareholder Approval: Shareholder approval, no Material Adverse Effect to Costa, and other customary conditions are essential.

5. Timetable and Industry Significance

• Implementation Timeline: Subject to shareholder approval, the Scheme's implementation is anticipated in the first quarter of 2024. A Scheme Booklet with comprehensive details will be circulated to shareholders, who will then vote on the proposed acquisition.
• Industry Impact: Costa's strategic move, backed by Paine Schwartz Partners, signifies a significant development in the agribusiness sector, reflecting ongoing trends of strategic acquisitions and partnerships within the industry.

6. Future Outlook

• CY23 EBITDA-S Expectations: Costa revises its CY23 EBITDA-S expectations, anticipating a result below CY22 due to adverse weather conditions affecting citrus crops.
• Dividend Information: The company will not pay an Interim Dividend for 1HCY23. The Scheme Consideration is $3.20 per Costa Share, subject to any dividend declared by the Board.
• Strategic Implications: Costa's strategic move, aligned with industry trends, showcases a proactive approach to navigate uncertainties and drive future growth in the agribusiness sector.

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