Costa Group (ASX: CGC) is set to consolidate its position in Australia’s two leading fruit export commodities – table grapes and citrus – through the acquisition of Nangiloc Colignan Farm’s (NCF) farming operations in the greater Sunraysia district of North West Victoria.
The company announced today (Nov. 16 AEDT) it had signed a conditional agreement in conjunction with a subsidiary of CK Life Sciences Int’l (Holdings) Inc, through which CK would acquire the farm to be leased to Costa for 20 years.
The group expects the acquisition to be completed in late 2018.
NCF is a grower of high quality citrus and grapes across 567 hectares, including 240 hectares of citrus (103ha Afourer mandarins, 105ha oranges), 204 hectares of table grapes and 123 hectares of wine grapes.
Costa CEO Harry Debney said the acquisition and its focus on the Sunraysia growing region opened up growth opportunities that were not available in the South Australian Riverland, an area where Costa produces approximately half of the citrus crop.
“This acquisition and location in the Sunraysia region will reduce reliance on any one region in our portfolio and will also open up additional growth opportunities,” Debney said.
“In particular, with respect to Afourer mandarins and navel oranges this will allow us to further take advantage of export market demand.”
Costa said NCF had “attractive plantings” of proprietary table grape varieties, and it was expected the majority of table grape sales from the farm would be for export markets.
Up to a third of the NCF citrus plantings are less than five years old., while Cossta plans to convert wine grape vineyards to citrus plantings over time.
The operation has a main operating shed, cool rooms, machinery sheds and workshops, as well as 3,800ML of water under permanent licence and more than 100ML of irrigation dam capacity.
“Over recent years Costa has embarked upon both greenfield growth and M&A activity in the citrus category. This has been fuelled by expanded favourable export markets and free trade agreements with countries including Japan, South Korea and China,” Debney said.
“In order to further capitalise on this, Costa is trialling several new mandarin, orange and lemon varieties on commercial sized blocks that have market potential with improved attributes including, seedless, high brix (sugar), red flesh and different maturity timing.”
With the current 2,429 hectares of citrus category plantings Costa has in the South Australian Riverland, the NCF acquisition will bring the Company’s total plantings in the Riverland and Sunraysia regions to 2,996 hectares.
The deal comes just days after Bennelong Australian Equity Partners announced it had increased its stake in the company over recent months to hold 12.5% voting power in Costa, on behalf of security holders Citi, NAS, BNP, RBC and RBC Lux.