Paine Schwartz takeover of Costa Group wins shareholder backing

The deal to delist Costa Group now only requires the formality of Foreign Investment Review Board approval to complete, with the firm set to become a private company again after listing in 2015.

Costa Group shareholders have voted in favor of a takeover deal led by Paine Schwartz Partners, in a transaction worth around A$1.5 billion ($989 million; €909 million).

The private equity firm will acquire all the remaining shares in Costa that it does not already own, paying A$3.20 per share in cash. Investing alongside Paine Schwartz are British Columbia Investment Management Corporation and US-headquartered berry grower Driscoll’s.

Agri Investor understands that some of the capital for the deal has come from Paine Schwartz Partners’ Food Chain Fund VI, which reached a final close in September 2023 on $1.7 billion, ahead of its $1.5 billion target. It is also among the largest individual deals by value that Paine Schwartz has undertaken.

Costa Group is one of Australia’s leading listed agribusinesses, operating more than 7,200ha of planted farmland, 40ha of glasshouse facilities, and three mushroom-growing facilities, as well as majority-owned joint ventures operating six blueberry farms in Morocco and four berry farms in China.

Paine Schwartz already owned a stake of 13.78 percent, acquired in October 2022 at a price of A$2.60 per share. The takeover valued the equity in Costa Group at around A$1.5 billion and implied an enterprise value for the business of approximately $2.5 billion.

The offer was 43 percent higher than the closing share price on October 25, 2022, which was the last closing price prior to Paine Schwartz acquiring its minority stake, and was 18 percent higher than the closing price of A$2.72 on the day immediately before news of the take-private deal became public.

The board of Costa Group recommended that shareholders back the takeover, which they did – 98.35 of votes cast by shareholders on January 30 were in favor of it.

The acquisition is still subject to approval by the Foreign Investment Review Board. Assuming there are no issues with gaining approval form the Australian government’s Foreign Investment Review Board, Costa will delist from the Australian Securities Exchange on February 8.

The completion of the deal will see Paine Schwartz take ownership of Costa for the second time. It previously acquired the firm when it was known as Paine & Partners, acquiring a 50 percent stake in July 2011 through its third fund before investing further in the business. It subsequently floated Costa on the ASX in July 2015.