Shareholders will vote on takeover proposal in January 2024, while latest outlook notes challenging conditions to end year
Costa Group has announced the date of its shareholder vote on an A$1.496bn acquisition bid from Paine Schwartz Partners-led consortium including Driscoll’s.
Shareholders for the publicly listed Australian fresh produce grower-packer-marketer will convene on 30 January 2024 to vote on the scheme implementation agreement (scheme).
If approved, the implementation date for the scheme has been set as 26 February 2024.
In an announcement, the company outlined the process for the scheme vote and released a scheme booklet to provide information on the scheme for shareholders.
The booklet reiterated the board of directors’ unanimous recommendation that shareholders vote in favour of the scheme and included an independent expert’s report prepared by Kroll Australia that concluded the scheme is fair and reasonable and in the best interest of shareholders.
It also outlined the intentions of Bidco – the Australian subsidiary of the consortium established to acquire Costa’s shares for the sale – if the scheme is successful. Bidco plans to conduct a detailed post-acquisition review before making any decisions but said it intends to follow Costa’s current strategic direction.
“Subject to the post-acquisition review… Bidco’s current intention is to continue the current strategic direction of Costa, including actively pursuing growth opportunities available to Costa. In addition, Bidco’s current intention is to continue to expand the strategic relationship between Costa Group and Driscoll’s with respect to the global licensing, production, and marketing of berries,” the scheme booklet said.
Earnings update
Costa also provided an earnings update in its announcement and noted challenging conditions were set to further impact results for the 2023 calendar year (CY23).
“In August 2023, Costa announced that it expected the full year CY23 EBITDA-S to be above the CY22 result. With the knowledge of actual trading since August 2023 including the finalisation of both the northern and southern citrus crops and Costa’s current outlook for the remainder of CY23, Costa now expects the full year EBITDA-S result to be below CY22,” the company said.
Costa said unfavourable impacts from adverse weather conditions in late CY22 and early CY23 on its citrus category are expected to continue through the end of the year, meanwhile, strong domestic berry and tomato supply will impact pricing.
“More recent favourable growing conditions on the Australian eastern seaboard are expected to deliver significant industry volumes in Costa’s berry and tomato categories and when combined with a significant change this year in Australian consumer sentiments influencing purchasing behaviour because of current economic conditions, forecast pricing in Costa’s Produce segment is expected to be below Costa’s previous expectations for the remainder of the calendar year,” Costa said.
