Webster Limited is set to become the latest Aussie ag firm snapped up by Canadian interests, with a proposed $854 million takeover by PSP Investments sending the nut and livestock producer’s shares soaring by more than 50 per cent.
The ASX-listed agribusiness said on Wednesday that PSP subsidiaries PSP BidCo and Sooke Investments Inc would acquire all Webster shares not already owned by the fund manager for $2 apiece, if investors and the courts see fit.
The total bid implies Webster’s enterprise value at approximately $854 million and market capitalisation $724 million.
The news sent Webster shares as high as $1.96 at Thursday’s open, a 54 per cent climb on Wednesday’s close, and within touching distance of the company’s all-time high of $2.06 set in June last year.
Webster’s stock price was still 52.36 per cent higher at $1.935 by 1030 AEST.
Webster Limited managing director and chief executive Maurice Felizz said the company was encouraged by PSP’s understanding of the business and its ongoing importance to regional and rural communities.
“PSP Investments has a proven track record in managing and investing in agricultural assets over the long term for sustainable value creation and therefore we believe this transaction represents a positive outcome for all stakeholders in our business,” Mr Felizz said on Wednesday.
Webster directors Chris Corrigan and David Fitzsimons will not participate in consideration of the transaction, or any recommendation to shareholders, due to their association with firms that will sell their stake in Webster but gain a slice of PSP’s new smaller venture, KoobaCo.
The takeover proposal comes about a month after Ruralco shareholders overwhelmingly voted in favour of a $469 million takeover by Canadian fertiliser giant Nutrien – which already owns the Landmark brand in Australia.
The ACCC last month also approved Elders’ proposed $187 million takeover of Australian Independent Rural Retailers – but the watchdog said it was closely monitoring increasing consolidation in the nation’s drought-struck rural sector.
Webster operates walnut and almond orchards in NSW and Tasmania, as well as irrigable land for cotton and other annual crops, cattle and dorper sheep production, a portfolio of water entitlements, and an apiary business in NSW.
The company’s half-year result in May was blighted by drought – a familiar theme among Australian ag players over the past two years – with net profit dropping 46 per cent to $2.1 million.
The company on Wednesday said it maintained expectations for a “near breakeven” position for the full year to September 30 as drought weighs on walnut production and pricing.
The deal represents a 57 per cent premium on Webster’s closing share price of $1.27 on Wednesday, and a 47 per cent premium to the net assets per share – including water rights – of $1.36 at March 31.
A shareholder vote is expected to be held in early 2020, with an independent board committee unanimously backing the deal.