Brokerage Morningstar expects Australia's Costa Group buyout by Paine Schwartz likely to proceed

Costa group

24/09/2023 22:36

** Brokerage Morningstar believes U.S. fund manager Paine
Shwartz's proposed takeover of "no-moat" horticulture co Costa
Group  CGC.AX  is likely to proceed now that firms have entered
a scheme implementation deed
    ** Morningstar finds buyout offer attractive on valuation
grounds, representing a 22% premium to Costa's last closing
price prior to proposal and a 3% premium to their stand-alone
valuation
    ** Morningstar raises fair value estimate to A$3.20 from
A$3.18, as they expect deal to proceed
    ** "We expect Costa's strong earnings growth to continue
over the near term" - Morningstar
    ** Brokerage forecasts Costa growing its Australian market
share to around 20% over the next five years, from 15% currently
    ** 4 of 10 analysts rate the stock "buy" or higher, 6
"hold"; their median PT is A$3.08 – LSEG data
    ** Stock has risen 12.4% this year, as of last close

(Reporting by Adwitiya Srivastava in Bengaluru; Editing by Chizu
Nomiyama )
((mailto:Adwitiya.Srivastava@thomsonreuters.com;))