Costa Group shares jump as it accepts lower private equity offer

The news: Australia’s top fruit and vegetable supplier, Costa Group, has accepted a reduced takeover offer led by US private equity group Paine Schwartz Partners (PSP).

The numbers: Costa said its board unanimously considers the revised $3.20 a share offer, tabled earlier this week, in the best interests of shareholders. The PSP-led consortium already owns 19.62% of the equity in Costa and is offering cash for the remaining shares. Costa shares were up more 6.4% to $3.09 in early trading on the ASX.

The context: PSP lowered its bid from the $3.50 per share initially offered in May, following a drop in Costa’s half-year profit last month and a warning by the company that earnings would fall in the second half of the year, along with a forecast of a $30 million hit from weather-related problems. The takeover is expected to be completed in the first quarter of 2024.