Duxton Farms Ltd (ASX:DBF) Announces Strategic Merger and Special Dividend
Strategic Merger and Expansion
Duxton Farms Ltd (ASX:DBF) has proposed a strategic merger to acquire four Australian private companies operating in walnuts, dried fruits, orchards, and bees. This merger is expected to add approximately $149 million in additional pro forma gross assets, bringing the total to $298 million. The expanded portfolio will now cover over 177,000 hectares of land and 32,000 megalitres of water entitlements.
Financial Impact and Placement
To facilitate the merger, Duxton Farms is undertaking a $4.0 million conditional underwritten placement of new fully paid ordinary shares at an offer price of $1.25 per share. The placement is fully underwritten by Bell Potter Securities Limited and Morgans Corporate Limited and will be subject to the implementation of the merger and requisite approvals.
Dividend Declaration
Duxton Farms has declared an 85% franked special dividend of $0.24 per share. The special dividend follows the recent divestment of the Kentucky property for $38 million. The company’s two largest shareholders have committed to participating in the dividend reinvestment plan, representing 52.1% of the total dividend.
Executive Comments
Independent Director Mark Harvey commented on the merger, stating, “Over the past three years Duxton Farms has been pursuing a strategy to broaden and expand the Company’s exposure to the Australian agricultural sector. As outlined previously to investors, the Board has been absolutely focused on building a scalable agricultural investment platform that represents a unique value proposition on the ASX in a way that allows all shareholders to participate in the Company’s growth and development, and we believe that the proposed transaction marks a significant milestone in achieving that goal.
The walnut, dried fruit, apiary and apples businesses being brought into Duxton Farms are expected to significantly derisk the Company’s geographic and commodity exposure while expanding and diversifying its earnings profile. The Board will continue to consider opportunities to cycle out of lower yielding assets into high-growth opportunities in order to further derisk the portfolio and create sustainable long-term value for all our stakeholders, be that through further dividends or capital growth.”
Motley Fool contributor Lianne Eastty has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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