Almond grower Select Harvests rejects $430m takeover from Arab investor
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Almond grower Select Harvests has revealed it rejected a takeover offer from an Arab buyer.
The Abu Dhabi sovereign wealth fund Mubadala Investment Company made a non-binding offer of $5.85 a share in cash on September 19, valuing the company at about $430.6 million.
Select’s (ASX:SHV) shares rocketed almost 24 per cent on the news to $5.21, before dropping back.
Select told shareholders the offer was highly conditional.
Mubadala wanted, among other things, exclusivity while doing due diligence, no significant changes in the business during that time including no dividends to be paid, and a unanimous recommendation from the board.
The board said it didn’t think the offer properly valued the fact that Mubadala would gain full control of Select Harvests, and the potential risks around foreign investment regulatory approvals and disruption from the due diligence process were unfair burdens on the business.
They also thought the fact that Mubadala wanted a scheme of arrangement, which would impose heavy costs on the company whether the takeover went through or not, the exclusivity clause, and prevention from making payments such as dividends were high costs for an unsolicited offer.
Managing director Paul Thompson told Stockhead that while they were “always prepared for potential bids”, they’re not readying themselves specifically for another from Mubadala.
The offer was announced just before Select unveiled a $65 million capital raising at $4.20 a share.
The institutional placement was held on Friday, and Mr Thompson said Mubadala did not participate because it was for existing shareholders only.
Retail shareholders will be able to participate in a share placement plan that starts today.
The total raising will add 15.46 million new shares, or a 21 per cent increase in the issued stock.
Select said proceeds would be used to reduce gearing from 52.5 per cent to 24.4 per cent, after the $26.4 million acquisition of Jubilee Orchards in fiscal 2017.