Costa group agrees to $1.5 billion takeover

Tomato Farm entrance at Elm Street
26th Sep 2023

The board of the Costa group, owners of the Guyra tomato farm, has agreed to a $1.5 billion takeover offer from a consortium headed by private equity firm Paine Schwartz Partners.
Paine, which floated Costa in 2015, acquired a 13.8 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.
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.
Paine Schwartz specialises in agribusiness and food chain buyouts. The consortium also includes Californian berry group Driscoll’s Inc and the British Columbian Investment Management Corp.
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.
Scot MacDonald, State Manager NSW for the Costa Group, said that they foresee no immediate changes to the Guyra operations of Costas.
“This acquisition has been coming for some months,” Mr MacDonald said.
“The Paine Schwartz team visited our glasshouses late last year and had the opportunity to see the highly productive and technologically advanced growing and packing systems.
“The new owners have been in the agricultural investment business for a long time and understand the opportunities and challenges.
“Costas in Guyra employ up to 800 staff in its peak summer period and are an important economic driver for the region.
“Our leadership team is focussed on the business continuing to be commercially successful.”