Canada’s Public Sector Pension Investment Board (PSP Investments) has made another move to deepen its presence in Australian agriculture, taking full ownership of the largest irrigated farmer in Australia.
PSP Investments acquires Australian agribusiness Webster in a deal valuing the company at $854 million
By Lynda Kiernan
Canada’s Public Sector Pension Investment Board (PSP Investments) has made another move to deepen its presence in Australian agriculture, agreeing to have its wholly owned subsidiary PSP BidCo acquire all shares not already owned in Australian agribusiness Webster through a deal valuing the company at $854 million (US$578.2 million).
With a history spanning 180 years, Webster has grown to become the largest producer of walnuts and one of the largest irrigated farming operations in the southern hemisphere. Since its founding, the company has grown to have three main pillars:
Walnuts and Almonds – Webster controls walnut and almond operations across New South Wales and Tasmania, and is the largest producer of premium in-shell and kernel walnuts in the southern hemisphere, supplying approximately 90 percent of Australia’s walnuts.
Agriculture – The company is also the largest irrigated farmer in Australia with 40,000 fertile, irrigated hectares of cotton, corn, and cereals, as well as livestock and dorper sheep operations, and an apiary business in New South Wales.
Water – After its takeover of the Tandou farming and water trading business in New South Wales in 2015, Webster owns a portfolio of more than 200,000 megaliters of water entitlements that support the diversity of its operations and provide the company with a competitive market advantage.
PSP Investments, which currently holds a 19.1 percent stake in Webster, has agreed to pay A$2 (US$1.35) per ordinary share it does not already hold in the company, representing a 57.5 percent premium against share closing value on October 2.
“The Webster acquisition is highly complementary to our existing joint ventures with on-the-ground operating partners in Australia,” Managing Director of PSP Investments Marc Drouin told AFR. “We see this investment as a unique avenue to scale our Australian investments in each of permanent crops, row crops and livestock.”
If approved, the terms of the deal dictate that PSP Investments is to transfer select assets – including cotton and hay properties and their associated water rights, the southern grazing livestock business, and the apiary business – into KoobaCo, a newly formed PSP Investments group entity in which existing shareholders Belfort Investment Advisors and Verolot Ltd. will then be given the opportunity to acquire up to a 50.1 percent stake.
The remaining Webster assets, including walnut and almond orchards, row cropping operations, and livestock businesses, PSP plans to delist from the ASX to run privately.
This deal for Webster is the second major agriculture acquisition in Australia for PSP since January of this year, when the pension acquired Proterra Investment Partners majority stake in Australian diversified farming business BFB Pty Ltd for $208 million.
Prior to this, in 2017, PSP Investments diversified its Australian beef and cattle holdings into organics with the acquisition of a 15 percent stake in Arcadian Organic Natural Meat Co, one of the largest organic meat companies in the country, through its joint partner Hewitt Cattle Australia (HCA). Under the terms of the deal, HCA also acquired two cattle stations, the 28,340-hectare Oakwood Station in western Queensland, and the 1,740-hectare Warilba Station in western New South Wales.
The Canadian fund cut its first Australian farmland deal in 2015 when it acquired Sir Graham McCampley’s 13,650-hectare Oakleigh and Stoodleigh stations for approximately $13 million in 2015. Today, the Oakwood and Warilba Stations, along with the stake in Arcadian Organic Natural Meat, join a growing portfolio that includes the Ambalindum and Numery stations which HCA acquired earlier this year in April for A$50 million (US$33 million).
PSP Investments has expectations that its deal for Webster will close in the first quarter of 2020, given it secures all necessary regulatory and shareholder approvals. Toward this end, two non-conflicted Webster directors, David Cushing and Maruice Felizzi, are recommending that the company’s shareholders vote their approval for the scheme.
“The Proposed Transaction provides a substantial premium for both Webster ordinary shareholders and preference shareholders and also provides enhanced certainty and accelerated value for their shareholding,” said Maurice Felizzi, managing director and CEO of Webster.
“We also concluded that Webster and PSP Investments have complementary, long-term growth aspirations making PSP Investments a logical and suitable owner of the Webster asset portfolio,” continued Felizzi. “We are encouraged by their understanding of our business and its ongoing importance to regional and rural communities in Australia.”
“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.”