Webster to delist if Canada’s PSP buy-out proceeds

Grain Central October 15, 2019

CANADA’S PSP Investments has entered into an agreement with Webster Limited to extend its ownership of ordinary shares from 19.1 per cent at present to 100pc.

Walnut trees in flower. Photo: Webster Australian Walnuts

If accepted, it would see this major New South Wales irrigator and cotton and nut producer delist from the Australian Securities Exchange.

PSP Investments, formally the Public Sector Pension Investment Board, proposes to buy the Webster shares through two of its wholly-owned subsidiaries, PSP BidCo and Sooke Investments Inc.

PSP Investments is one of Canada’s largest pension investment managers, and is already a large-scale owner of Australian agricultural land.

The agreed sale price per share is $2 in cash, and at the time of the announcement on 3 October, this represented a premium of 57 per cent to Webster’s most recent closing price.

The non-conflicted directors of Webster, David Cushing and managing director and CEO Maurice Felizzi, are recommending Webster shareholders vote in favour of the schemes, which are likely to be implemented by March next year.

PSP BidCo also intends to acquire all Webster preference shares on issue for $2 in cash via a separate scheme.

The schemes which propose to buy the ordinary and preference shares imply a market capitalisation for Webster of approximately $724 million and an enterprise value of approximately $854M.

Webster is one of Australia’s leading agribusinesses.

It operates walnut and almond orchards in NSW and Tasmania, and grows irrigated cotton and other annual crops, produces cattle and dorper sheep, and has a portfolio of water entitlements and an apiary business in NSW.

PSP Investments invests funds for the pension plans of the Canadian Federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Forces.

Through its Natural Resources group, PSP Investments invests globally in agriculture, forestry and related opportunities via direct investments.

Plans for KoobaCo

Should the scheme to buy all the ordinary shares for $2 apiece be implemented, Webster will transfer certain assets to a new and separate PSP Investments group entity, KoobaCo, for a value of $276.7M.

These assets would comprise the Kooba property aggregation and business, the Hay properties and business, the southern grazing stock and business, the apiary business and certain water entitlements related to the Kooba and Hay properties on the south-west plains of NSW.

Belfort Investment Advisors Limited (Belfort) and Verolot Limited (Verolot) will be offered an opportunity to acquire a 50.1pc ownership interest in KoobaCo after implementation of the scheme.

Belfort and Verolot own 12.5pc and 10.7pc respectively of Webster’s ordinary shares, and the entities are associated with Webster directors Chris Corrigan and David Fitzsimons.

Implementation of the scheme remains subject to approval by shareholders, the Australian Competition and Consumer Commission and the Foreign Investment Review Board.

The Webster Independent Board Committee intends to appoint KPMG Corporate Finance as an independent expert to report on the schemes which propose to buy the ordinary and the preference Webster shares.

Drought impacts earnings

Webster earlier advised that the continuing drought had affected all areas of production and this, combined with lower-than- expected walnut production and pricing, meant the company was expected to record “a near breakeven position” for the 12 months to 30 September 2019.

Mr Felizzi said PSP’s proposal gave Webster shareholders the ability to “immediately realise a significant premium to the share price without the inherent risks associated with agricultural enterprises.”

Mr Felizzi said Webster and PSP Investments have complementary, long-term growth aspirations, which made PSP Investments a “logical and suitable owner” of the Webster asset portfolio.

“We are encouraged by their understanding of our business and its ongoing importance to regional and rural communities in Australia,” Mr Felizzi said.

“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.”

PSP Investments in Australian agriculture are extensive, and recent acquisitions include a reported stake in Midkin at Moree in north-west NSW, and the BFB cropping operation centred at Temora in south-west NSW.

The Daybreak Cropping partnership between Warakirri Asset Management and PSP Investments is a national broadacre cropping business which this year extended its portfolio to include Queensland properties.

Source: ASX, Grain Central


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