Macquarie Infrastructure and Real Assets has made a bid to acquire 100 percent of the Australian Securities Exchange-listed Vitalharvest Freehold Trust.
MIRA made the bid via one of its agriculture funds and offered A$1 ($0.73; €0.62) per unit by way of scheme of arrangement, a deal worth approximately A$185 million. MIRA has also offered to acquire all of Vitalharvest’s assets for A$300 million should the scheme fail to be approved by shareholders.
Both bids are all-cash, fully funded and do not require Foreign Investment Review Board approval, MIRA said.
The management rights for Vitalharvest were acquired in June 2020 by ASX-listed real estate investor Primewest, as part of the latter’s wider push into Australian agriculture.
Alongside its acquisition of Vitalharvest’s previous manager goFARM Asset Management for A$10 million, Primewest also acquired an 11.8 percent interest in the trust, with an option over a further 6.2 percent stake.
Primewest’s holding stood at 13.92 percent on August 31, 2020, making it the largest unitholder in the trust, according to Vitalharvest’s latest annual report. The firm had intended to rename the vehicle as the Primewest Agri-Chain Fund once its transaction closed, as well as expanding its mandate to invest in agricultural supply chain and logistics assets.
At the time of the deal, Primewest said that Vitalharvest’s portfolio was worth around A$275 million and was Australia’s largest aggregation of berry and citrus farms. The trust generated A$8.8 million in funds from operations in the year to June 30, 2020.
Its assets are 100 percent leased to Costa Group, one of Australia’s largest listed agribusinesses and food producers, on an initial 15-year term that commenced in 2011. Costa holds an option to extend the leases for a further 10 years from July 2026.
MIRA said the scheme of arrangement represented an 11.8 percent premium to Vitalharvest’s current adjusted net asset value of A$0.894 per unit, a 27.4 percent premium to Vitalharvest’s closing unit price on November 6 of A$0.785, and a 29.5 percent premium to the 30-day volume weighted average price of A$0.772. MIRA also said the A$1 per unit offer was greater than Vitalharvest’s highest closing price since January 9, 2019.
The alternative offer to pay A$300 million to acquire Vitalharvest’s assets appears to be a tactic by MIRA to circumvent any attempt by Primewest to block the scheme of arrangement.
MIRA said its alternative offer for the assets represented “an opportunity for the responsible entity [Perpetual] to realize Vitalharvest’s assets at a material premium, with net proceeds available (whether in part or whole) for distribution to unitholders or reinvestment into alternate assets, should the manager put forward a compelling opportunity.”
It said the offer represented a 7 percent premium to the fair valuation of Vitalharvest’s properties as stated at June 30, 2020 and an 11.8 per cent premium to Vitalharvest’s current adjusted net asset value of $0.894 per unit.
Other major shareholders in the trust apart from Primewest are Australian Ethical Investment (8.11 percent holding), Salt Funds Management (8.07 percent) and Costa Asset Management (6.24 percent).
Trading in Vitalharvest’s shares has been halted pending an announcement to shareholders.