Costa is a large grower of berries, mushrooms, citrus fruit, tomatoes and avocados. It operates 7200 hectares of farmland in Australia, has been listed on the ASX since 2015 and has facilities in Morocco and China.
Retail shareholder Norman Wills told the meeting he believed shareholders “were giving this company away at a lowball price”.
Henry Stephens, representing the Australian Shareholders’ Association, described it as an “opportunistic acquisition” and said directors should have waited for the agricultural cycle to improve in what was a volatile industry.
Mr Chatfield said the Kroll report had concluded the reduced offer was “both fair and reasonable”.
“We still think it’s a fair price,” Mr Chatfield said. “We sit very close to the top of the range.”
The New York-headquartered buyout group on September 18 sliced $100 million from the original offer made in May. It was cut from the original $3.50 a share price to $3.20 a share after two months of due diligence and accounting for Costa’s weaker profit outlook, a $30 million hit from adverse weather conditions and a poor citrus crop.
Mr Chatfield said the reduction in the offer price in part had stemmed from Costa being too bullish in its earlier negotiations about the citrus crop outlook. “Our forecasts proved to be over-optimistic,” he told shareholders.
Under the current timetable, Costa will be de-listed from the ASX on February 8.
It will mark the second time that Paine Schwartz will assume ownership of Costa. The private equity group floated Costa onto the ASX in 2015. It acquired a 13.8 per cent stake in Costa last October at $2.60 a share and began discussions in April about a takeover offer in the range of $3.20 to $3.30 a share. It followed with a non-binding proposal at $3.50 a share in May that valued Costa at $1.6 billion. But that was trimmed to $3.20.
Mr Chatfield paid tribute to the Costa family which expanded the business into a fruit and vegetable wholesaler in the late 1950s from its origins as a single fruit and vegetable store in Geelong in Victoria. Frank Costa, a regular on The Australian Financial Review’s Rich List until his death in 2021, was one of two brothers who spearheaded the expansion into a large player.
“It’s a wonderful legacy the family has left,” Mr Chatfield said.