The Costa Group Holdings Ltd (ASX: CGC) share price will be one to watch closely this morning.
This follows news that a private equity firm has been buying the ASX 200 horticulture company's shares.
What's going on with the Costa share price?
Investors have been scrambling to buy the company's shares today after its former owner snapped up a major stake at a sizeable premium.
According to a notice of initial substantial holder, Paine Schwartz Food has taken advantage of recent weakness in the Costa share price to return to its share registry.
The US based private equity firm, which floated Costa onto the Australian share market back in 2015 at $2.25 per share, has acquired a relevant interest in 13.78% of the company's issued shares.
It achieved this through a series of trades this week, which were as follows:
- 46,408,191 shares for $120.66 million or $2.60 per share
- 11,041,386 shares for $23.2 million or $2.10 per share
- 6,568,934 shares for $17.1 million or $2.60 per share
This equates to an average purchase price of approximately $2.51 per share, which is a sizeable 12.5% premium to the Costa share price at yesterday's close. Clearly, Paine Schwartz Food was keen to get hold of this stake.
It is also worth noting that technically the private equity firm only owns the first row of shares (~46.4m). This is due to Foreign Investment Review Board (FIRB) rules that limit its ownership to 9.99% without FIRB approval.
The remainder of the shares are forward contracts or total return swaps, which provide for physical settlement subject to receipt of a no objection notification under the Foreign Acquisitions and Takeovers Act.
What's next?
It remains unclear whether Paine Schwartz Food will take things further from here and seek to take Costa private again or just sit passively on this investment.
What is clear, though, is that this private equity firm sees the Costa share price pain in 2022 as a buying opportunity.
