Costa Group’s share price jumped six per cent at opening trade this morning (22 September) after telling the market it accepted a $3.20 cash per share takeover offer by US private equity company Paine Schwartz Partners (PSP).
At close yesterday, shares were trading at $2.90, jumping to $3.11 after the announcement. At the time of press it was trading at $3.10.
The scheme values Costa’s equity at around $1,496 billion and an enterprise value of $2,459 million, representing premia of:
- 43 per cent to the closing share price on 25 October 2022 of $2.23, which represents the last close prior to PSP acquiring a 13.78 per cent interest in Costa;
- 23 per cent to the price of $2.60, the price at which PSP acquired a 13.78 per cent relevant interest in Costa on 25 October 2022;
- 18 per cent to the closing share price on 30 June 2023 of $2.72; and
- 25 per cent to the three-month VWAP to the closing share price on 30 June 2023 of $2.57.
Costa chair Neil Chatfield said the board looked at several valuation scenarios, potential risks to implementing its growth plan and the price shares could trade at over the medium to long term if it stays an independent listed company.
Chatfield said, “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.”
The PSP-led consortium is comprised of entities controlled by PSP, Driscoll’s Inc and British Columbia Investment Management Corporation. Together they already own roughly 19.62 per cent of Costa.
The Costa board unanimously agreed the scheme was in the best interest of the company.
The buyout will be subject to shareholders approval. If the scheme goes ahead, existing shareholders will be entitled to $3.20 per share.
There are several conditions on the deal. PSP said it already has approval from the Foreign Investment Review Board to acquire the company, but approval will have to be sought from other countries it has operations in, including the Chinese State Administration for Market Regulation, Moroccan Competition Council, and European Commission.
