German company BayWa Aktiengesellschaft, a major supplier of fresh fruit to the retail trade and the country's largest supplier of organic topfruit, has won the right to buy all of the shares in New Zealand fresh produce company Turners & Growers (T&G) that are owned by investment company Guinness Peat Group (GPG) for NZ$137.4m (€79.3m), in a deal which values T&G at $216.5m (€125m).
If completed, the historic proposed deal would see the German corporation acquire not only a leading supplier of apples and kiwifruit, but also some of the fresh produce industry's major names, including Enza, Delica and Kerifresh, as well as shareholdings in two major international importers – UK-based Worldwide Fruit and US company Oppenheimer – and the rights to produce and market key protected topfruit and kiwifruit varieties like Jazz, Envy, Summerkiwi, EnzaRED, EnzaGREEN and EnzaGOLD.
It would also provide the group with ready-made channels into key, emerging markets in Asia, as well as boosting its position in other parts of the world.
"The takeover is a ground-breaking step towards globalization for BayWa," commented Klaus Josef Lutz, chief executive officer and board chairman of BayWa. "We will become one of the world's most important suppliers of fruit, as Turners & Growers is represented in all key markets on all continents. The door to Asia, the highest growth market for fruit, is now wide open for BayWa's fruit trading business."
The Munich-based giant's interest had been rumoured for some time, with Eurofruit sources revealing that representatives from BayWa visited New Zealand in late August to carry out due dilligence and then again in October to finalise and table their offer.
At Asia Fruit Logistica 2011 in Hong Kong, BayWay's CEO and board chairman Klaus Josef Lutz refused to confirm or deny any such interest, but T&G managing director Jeff Wesley was able to reveal at that stage that "two serious bids" for the group had already been received.
Other companies understood to have considered bidding for the group included US private equity firm Paine & Partners, leading Australian grower-packer Costa Exchange and an unnamed Japanese firm, although no official confirmation of such interest was forthcoming.
In an announcement to the New Zealand Exchange, GPG said it had agreed to sell BayWa its 74.25m shares in T&G, representing a 63.46 per cent shareholding, which it had put up for sale towards the beginning of the year.
Anthony Elsen, chief investment officer at GPG, commented: "GPG supports BayWa's proposed offer and believes that it is attractive. GPG welcomes the opportunity for the offer to be presented to all shareholders of Turners & Growers."
He added: "BayWa is a highly reputable company with a strong history in trading agricultural products. I expect that BayWa's expertise will assist Turners & Growers in continuing its successful expansion into international markets."
Under BayWa's proposed takeover offer, the price paid will be NZ$1.85 (€1.07) per share, higher than some analysts had privately predicted but still substantially below GPG's own book valuation of T&G, understood to be closer to NZ$2.50 (€1.44) per share.
For the time being, the proposed takeover remains subject to certain conditions, including approval from the Overseas Investment Office and the German Federal Cartel Office.
"The offer will also be conditional on BayWa receiving acceptances in respect of shares in Turners & Growers that confer more than 50 per cent of the voting rights in the company," a statement issued by New Zealand Exchange added.
BayWa has plenty of experience in handling fresh produce, particularly apples, although not outside Europe.
During the 2010 financial year, the company generated earnings before interest and tax of almost €130m from total revenue of approximately €8bn, derived from three main sectors, namely agriculture, building materials and energy.
The group's agriculture operations, meanwhile, generated a post-tax operating profit of €64.1m.
Within BayWa's agriculture business, which accounts for nearly half its overall revenues, fruit trading and wholesale forms a significant part.
The company's fruit operations, which handled 71,600 tonnes of fruit in 2010, saw a 23.4 per cent rise in turnover to €102.8m during the same period, posting €5.5m in earnings for the year before interest, taxes, depreciation, and amortisation.