The Costa Group Holdings Ltd (ASX: CGC) share price is on the move on Tuesday morning.
At the time of writing, the horticulture companyâs shares are up 10% to $3.28.
Why is the Costa share price rising?
Investors have been bidding the Costa share price higher today after the company confirmed speculation that it has received a takeover approach.
According to the release, on 31 May, Costa received an unsolicited, confidential, non-binding indicative proposal from Paine Schwartz Partners to acquire all of the issued shares in Costa which it does not already own by way of a scheme of arrangement.
Under the indicative proposal, Costa shareholders would receive a cash consideration of $3.50 per share. In addition, shareholders would be entitled to any interim dividend up to 4 cents per share that is declared in relation to the six-month period which ended on 2 July.
This values Costa at approximately $1.4 billion.
Whatâs the latest?
The release confirms that following a four-week period of initial due diligence, Paine Schwartz Partners has provided reconfirmation of the indicative proposal this morning.
The indicative proposal is subject to a number of conditions, including satisfactory completion of due diligence, execution of a binding scheme implementation agreement, and approval of the Paine Schwartz Partners investment committee.
Paine Schwartz Partners has also indicated that it has received approval from the Foreign Investment Review Board to acquire up to 100% of the shares in Costa. However, it notes that such approval may be required to be refreshed upon the finalisation of any co-investors.
And while media speculation suggested that Costa and Paine Schwartz Partners were hopeful that a deal would be reached this week, the company doesnât appear to expect such a swift conclusion. It explained that further due diligence and negotiations on a potential scheme implementation agreement are expected to continue through July.
It also warned that there is no certainty that the indicative proposal will result in a binding offer or that any transaction will eventuate.
The Costa share price is up now up 12% over the last 12 months.
