Duxton Walnuts Shareholders Back Merger: What’s Next for Agricultural Investment?
Duxton Dairies (Cobram) Pty Ltd (Duxton Walnuts) shareholders are set to vote on a scheme of arrangement for acquisition by Duxton Farms Ltd, with an independent expert concluding the merger is fair and reasonable. The transaction is part of a broader agricultural merger including Duxton Bees, Duxton Dried Fruits, and potentially Duxton Orchards.
- Scheme of arrangement for Duxton Walnuts acquisition by Duxton Farms
- Consideration – 1.471 Duxton Farms shares per Duxton Walnuts preference share
- Option for up to 20% cash consideration
- Independent expert values Duxton Walnuts preference shares at $1.38–$1.40
- Merger expected to create diversified agricultural platform with operational synergies
Background and Transaction Overview
Duxton Dairies (Cobram) Pty Ltd, trading as Duxton Walnuts, is an unlisted Australian proprietary company transitioning from dairy farming to walnut cultivation. Duxton Farms Ltd, an ASX-listed agricultural investment company, has proposed a scheme of arrangement to acquire all issued preference shares of Duxton Walnuts. The consideration involves issuing 1.471 Duxton Farms shares for each Duxton Walnuts preference share, with shareholders entitled to elect up to 20% of their consideration in cash.
This transaction is part of a larger merger that also includes Duxton Bees, Duxton Dried Fruits, and potentially Duxton Orchards. The merger aims to create a diversified agricultural platform with enhanced scale, operational synergies, and improved access to capital and liquidity.
Independent Expert’s Assessment
Leadenhall Corporate Advisory Pty Ltd was engaged to provide an independent expert’s report assessing the fairness and reasonableness of the Proposed Transaction for Duxton Walnuts preference shareholders. Using a net asset valuation approach on a going concern basis, adjusted for land, water entitlements, a sand quarry, and estimated net losses to June 2025, the expert valued a Duxton Walnuts preference share between $1.38 and $1.40.
The scrip consideration, based on recent Duxton Farms share trading and comparable company price-to-book ratios, was valued between $1.00 and $1.25 per Duxton Farms share. The independent expert concluded that the value of the consideration exceeds the control value of Duxton Walnuts preference shares, deeming the transaction fair.
Strategic Rationale and Market Implications
The merger is expected to deliver significant advantages including increased scale and diversification, which may reduce the discount to net tangible assets for Duxton Farms shares. Shareholders of Duxton Walnuts will gain liquidity benefits by holding shares in a listed entity and retain exposure to the agricultural sector within a broader, more diversified business.
Potential disadvantages include the uncertainty inherent in scrip consideration, changes in investment exposure for some shareholders, and the possibility of accelerated tax liabilities. The independent expert noted no superior proposals have emerged since the announcement.
Post-merger, the combined entity is projected to have a substantial agricultural portfolio spanning multiple commodities and regions, with opportunities for operational efficiencies and growth. The merger is subject to customary regulatory and shareholder approvals, with the scheme meeting scheduled for 10 October 2025 and court approval expected by 21 October 2025.
Next Steps for Shareholders and Market Watch
Duxton Walnuts preference shareholders are encouraged to review the Scheme Book and independent expert report carefully before voting. The merger represents a pivotal step in consolidating agricultural investments under Duxton Farms, potentially reshaping the sector’s investment landscape.
Bottom Line?
As Duxton Walnuts shareholders prepare to vote, the market awaits the merger’s impact on agricultural investment and sector consolidation.
Questions in the middle?
- Will any superior proposals emerge before the scheme meeting?
- How will the merger affect Duxton Farms’ share liquidity and valuation discount?
- What are the detailed tax implications for different classes of Duxton Walnuts shareholders?
