Duxton Farms to Boost Assets by $149M with Four-Company Merger and $4M Placement

Strategic Expansion Through Merger

Duxton Farms Ltd, a listed agricultural investment company, has announced a significant strategic merger involving the acquisition of four private Australian companies specializing in walnuts, dried fruits, orchards, and apiary operations. This move is designed to substantially increase the scale and diversification of its portfolio, which currently spans approximately 177,000 hectares.

The merger will add an estimated $149 million in pro forma gross assets, elevating Duxton Farms' total gross assets to nearly $298 million. The expanded portfolio will encompass around 180,000 hectares of land and 32,000 megalitres of water entitlements, positioning the company as a more substantial player in the agricultural sector.

Capital Raising and Dividend Initiatives

To support the merger, Duxton Farms is undertaking a conditional, fully underwritten placement to raise $4 million through the issuance of new shares at $1.25 each. This placement is subject to shareholder and regulatory approvals and includes participation commitments from the company’s two largest shareholders.

Complementing the capital raise, the company has declared an 85% franked special dividend of $0.24 per share, reflecting proceeds from the recent divestment of its Kentucky property. Notably, the largest shareholders have committed to reinvest their dividends, further aligning their interests with the company’s growth strategy.

Portfolio Diversification and Risk Mitigation

The merger is expected to diversify Duxton Farms’ exposure across new geographies and agricultural commodities, including permanent horticulture, viticulture, and apiary sectors. This diversification aims to derisk the company’s earnings profile by balancing mature operating businesses with greenfield projects that offer both immediate cash flow and long-term growth potential.

Duxton Farms’ independent director, Mark Harvey, emphasized the strategic importance of this transaction, highlighting the company’s commitment to building a scalable agricultural investment platform that delivers sustainable value through diversification and operational expertise.

Governance and Management Adjustments

Alongside the merger, Duxton Farms proposes to simplify its investment management agreement with Duxton Capital by adjusting the management fee structure to 1.25% of net asset value and removing the performance fee. This change is intended to streamline management costs and align incentives more closely with shareholder interests.

The merger and associated transactions are governed by detailed scheme implementation agreements and share purchase agreements, which include escrow arrangements for shares issued as consideration, ensuring orderly integration and alignment of interests among key stakeholders.

Next Steps and Approvals

The merger is subject to a series of approvals, including those from shareholders, regulatory bodies such as the Foreign Investment Review Board, and the courts. The company anticipates completion by September 2025, contingent on satisfying all conditions precedent. Investors are advised to monitor upcoming shareholder meetings and regulatory developments closely.