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Paine Schwartz offers $3.20/share for Costa Group

Costa Group’s private equity pursuer, Paine Schwartz Partners, has now tabled a ‘non-binding’ offer of $3.20 per share for Australia’s leading fruit and vegetable supplier.

Paine Schwartz Partners (PSP) expressed their interest on July 4, and since then, Costa has been in discussions with the American buyout firm to finalise due diligence.

The suggested $3.20 offer represents a slight premium over the previous Friday’s closing price of $2.94, valuing Costa at $1.37 billion. Furthermore, it offers a significant 14% premium compared to the $2.72 price on June 30, before PSP’s interest was known.

Following the July 4 announcement about PSP, Costa’s shares reached a high of $3.39. Before that, the year’s highest point had been $2.93 in January, making the suggested $3.20 offer notably attractive.

It’s worth noting that the $3.20 price is subject to a condition that allows for a reduction by any permitted dividend, up to 4 cents per share for Costa shareholders.

In their announcement on Monday, Costa Group stated, “PSP has also indicated that this offer is the best and final price at which the PSP-led consortium can deliver the proposed transaction.” The Costa Board is currently assessing the revised non-binding offer in consultation with its financial and legal advisors to determine whether it is in the best interest of shareholders.

However, the statement emphasised that there is still no certainty regarding the receipt of a binding offer or the actualisation of any transaction. Therefore, Costa shareholders are advised not to take any immediate action.

Costa Group’s interim results revealed an 8.7% increase in revenue to $771 million, a 7.2% rise in EBITDA to $150 million, and a decrease in after-tax profit to $37.8 million (with a statutory profit of $31 million).

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