Australian almond producer Select Harvests Limited (ASX: SHV) shares closed at $5.27 Monday, up 25.5% after it announced it has rejected a $430.6 million takeover proposal from United Arab Emirates sovereign wealth fund Mubadala Investment Company PJSC.
Select said the Mubadala offer significantly undervalued the company at $5.85 per share and was also highly conditional. The offer was 39% above the closing share price last Wednesday.
Hot on the heels of the Mubadala offer, Select Harvests launched a share market capital raising for $65 million. Proceeds of the share issue would be used to reduce debt following the $26.4 million acquisition of Jubilee Orchards in southern Australia earlier in 2017.
Foolish takeaway
Select did not rule out the possibility of a revised offer by Mubadala, but there's no guarantee that Mubadala will come back with a better offer. While Select's success is dependent on fluctuations in the price of almonds and seasonal factors, the company seems well equipped to grow within an expanding agricultural market. Investors who can bear the volatility could see Select shares pay off in the long-term.
