Costa Group has confirmed it received a takeover bid from US private equity firm Paine Schwartz Partners (PSP) but hosed down speculation a deal between the two would be reached quickly.
PSP’s indicative proposal gave shareholders $3.50 per share plus any interim dividend declared in relation to the six-month period ending 2 July of up to four cents a share. The New York firm reconfirmed its offer after four weeks of due diligence.
PSP floated Costa Group in 2015, when Harry Debney was CEO. Debney was CEO from 2010 and oversaw the company’s transition to a publicly listed business. When he stepped down in 2020, Sean Hallahan took the helm during what was to become a torrid time of a global pandemic and a serious of catastrophic weather events. Hallahan stepped down after eighteen months in September 2022 and Debney returned as interim CEO. A permanent replacement has not been announced.
Meanwhile, following PSP’s proposal, Costa said its board, financial and legal advisors decided it was in the best interest of shareholders to grant PSP an eight-week timeframe for non-exclusive due diligence, which began on 6 June.
Costa said that after PSP acquired 13.78 per cent of the company at $2.60 per share in October last year, the two spoke regarding a potential approach in the range of $3.20-3.30 per share.
It said that the proposal’s cash consideration, excluding any dividend, is a 34.6 per cent premium to the price PSP paid in October 2022.
PSP said it already has approval from the Foreign Investment Review Board to acquire 100 per cent of Costa, which may need to be refreshed depending on any co-investors.
Costa Group has appointed UBS Securities Australia as financial advisor and King & Wood Mallesons as legal advisor.
