Duxton Farms Offers 0.839 Shares Per Duxton Bees Preference Share in ASX Merger
Duxton Farms proposes to acquire all preference shares of Duxton Bees via a scheme of arrangement, offering 0.839 Duxton Farms shares per Duxton Bees preference share, with up to 20% cash consideration. The independent expert values Duxton Bees preference shares between $0.64 and $0.85 on a control basis and considers the transaction fair and reasonable.
- Duxton Farms to acquire Duxton Bees preference shares via scheme of arrangement
- Consideration includes 0.839 Duxton Farms shares per Duxton Bees preference share
- Up to 20% of consideration payable in cash based on $1.25 Duxton Farms share price
- Independent expert values Duxton Bees preference shares between $0.64 and $0.85
- Merger forms part of larger agricultural consolidation including Duxton Dried Fruits, Walnuts, and Orchards
Background and Transaction Overview
Duxton Farms Ltd, an ASX-listed agricultural investment company, has announced a proposed acquisition of all preference shares in Duxton Bees Pty Ltd, a leading Australian beekeeping and honey production business. The acquisition is structured as a scheme of arrangement, offering Duxton Bees preference shareholders 0.839 Duxton Farms shares for each preference share held, with an option to receive up to 20% of the consideration in cash. This transaction is part of a broader consolidation strategy that also includes acquisitions of Duxton Dried Fruits, Duxton Walnuts, and potentially Duxton Orchards.
Independent Expert Valuation and Recommendation
Leadenhall Corporate Advisory Pty Ltd was engaged to provide an independent expert’s report assessing the fairness and reasonableness of the proposed transaction. Using a discounted cash flow methodology, the expert valued Duxton Bees preference shares on a control basis between $0.64 and $0.85. The scrip consideration was valued between $1.00 and $1.25 per Duxton Farms share, based on recent trading prices and a cross-check against net tangible asset values of comparable companies.
The expert concluded that the consideration offered exceeds the assessed value of Duxton Bees preference shares, deeming the transaction fair. Furthermore, the transaction was considered reasonable due to advantages such as increased scale, diversification, liquidity, access to capital, and retained exposure to the agricultural sector. No superior proposals have emerged since the announcement, reinforcing the recommendation to vote in favor.
Strategic Rationale and Market Implications
The merger aims to create a larger, more diversified agricultural investment platform listed on the ASX, providing investors with exposure to a broad range of agricultural commodities and geographies. The combined entity is expected to benefit from operational synergies, enhanced purchasing power, and internalisation of corporate functions. The merger also addresses key sector risks, including the impact of Varroa mite on bee populations, weather volatility, and regulatory challenges.
Duxton Farms’ board and management team will continue to lead the merged group, with no immediate changes to the board composition announced. The transaction is subject to customary regulatory and shareholder approvals, with the scheme meeting for Duxton Bees scheduled for 10 October 2025 in Adelaide.
Risks and Considerations
Investors should be mindful of risks including the uncertainty inherent in scrip consideration, potential tax implications, and integration challenges. The Varroa mite remains a significant threat to the beekeeping industry, potentially affecting honey production and pollination services. Weather conditions and commodity price volatility also pose ongoing risks to the merged group’s performance.
Escrow arrangements will apply to a portion of the scrip consideration shares, potentially limiting short-term liquidity for some shareholders. Preference shareholders are encouraged to seek independent financial and tax advice to understand the implications of the transaction fully.
Bottom Line?
The Duxton Farms and Duxton Bees merger marks a significant consolidation in Australian agriculture, promising scale and diversification but hinging on shareholder approval and effective risk management.
Questions in the middle?
- How will the spread of Varroa mite impact Duxton Bees’ future pollination and honey production?
- What are the potential tax consequences for different classes of Duxton Bees shareholders under the scheme?
- How might escrow restrictions on scrip consideration shares affect liquidity and market pricing post-merger?
