x

Abu Dhabi, UAEFriday 14 December 2018

Bid for almond producer misses the value, says Select chief

Mubadala Investment Company offered $335m a share for Select Harvests on September 19, but the company rejected it

Select Harvests exports about 80 per cent of its output to Europe, India, China and parts of South-East Asia. Carla Gottgens / Bloomberg
Select Harvests exports about 80 per cent of its output to Europe, India, China and parts of South-East Asia. Carla Gottgens / Bloomberg

Despite a 44 per cent premium to its share price, Australia's No.2 Almond grower, Select Harvests, rejected an offer by Abu Dhabi's Mubadala, claiming it fails to value the company's plan to boost production by more than 50 per cent next year.

“About a third of our almond assets aren’t income-generative at the moment but largely the capital has been sunk in them,” said Paul Thompson, the company's chief executive, on Tuesday. “You really need to assign some value to the fact that these assets are going to be much more valuable when they grow.”

Mubadala Investment Company offered A$431 million (US$335 million) or A$5.85 a share for Select Harvest on September 19, 44 per cent more than the closing price a day earlier. Thomastown, Victoria-state based Select disclosed the bid on October 9 when it rejected it as significantly undervaluing the company.

Select, whose shares are still down 23 per cent this year even after a 25 per cent jump on Monday, dropped 3.4 per cent to A$5.09 as of 3:12pm Sydney time on Tuesday. It is not in talks with any other groups about potential deals, Mr Thompson said.

The almond market has been tough for the last couple of years and is now rebuilding, with Olam International, the second largest grower globally and biggest in Australia, noting on its second-quarter earnings call that prices had “recovered smartly.”

__________

Read more:

Khaldoon Al Mubarak interview: Mubadala Investment already active on the deal path

Exclusive: Mubadala explores investment options in Saudi Arabia

__________

Select exports about 80 per cent of its output to Europe, India, China and parts of South-East Asia. Demand is being boosted by increased consumption of products such as almond milk and protein balls. Australia is the second-largest producer, behind the US, according to industry organisation Australian Almonds.

“Clearly we are seeing a strengthening of demand and consistency in demand,” Mr Thompson said. “Almonds have re-based themselves at a lower price and have become more attractive over other competitive nuts.”

Select has orchards in the states of Victoria, South Australia and New South Wales across more than 4,000 hectares, according to its website. Its 2018 crop could be 15.8 million metric tons based on acres planted, age profile and industry average yields, up 53 per cent on the previous year and climbing to 21.6 million tons by 2024, the company said in a presentation as part of a capital raising this week.