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Private equity-backed group Hasfarm Holdings has launched a $270 million takeover bid for flower producer and wholesaler Lynch Group (ASX: LGL) in a deal that will see the Sydney-based company become part of the largest tropical highlands grower of temperate flowers in Asia.
Th Hong Kong-headquartered Hasfarm, which is majority owned by TPG, has already secured support from shareholders that control about 38.5 per cent of Lynch’s capital and unanimous support from the company’s board for the buyout.
Lynch, which today posted a 9 per cent increase in underlying profit to $43.2 million, has entered into a scheme implementation agreement with Hasfarm with the deal still subject to shareholder approval.
“The Lynch board has carefully considered the proposed acquisition of Lynch by Hasfarm and unanimously supports the scheme,” says Peter Clare, a non-executive director at Lynch.
“After a thorough assessment of the strategic, financial and operational considerations, we believe that the scheme represents a compelling opportunity for Lynch shareholders.
“The all-cash offer provides liquidity at a premium to Lynch’s recent share price and delivers certainty of value for Lynch shareholders, while recognising the long-term potential of Lynch's assets and people under Hasfarm's ownership.”
Hasfarm is offering $2.245 per share for Lynch which includes the company’s final dividend of 9c per share. The price is pitched at a 34.3 per cent premium to Lynch’s six-month volume weighted average price of $1.67.
Hasfarm, which produces cut flowers and pot plants in Vietnam, China and Indonesia, also operates a consumer-facing businesses retailing flowers in-store and online, along with wholesaling businesses in Vietnam, China and Japan.
“A combination of Hasfarm and Lynch Group combines the strengths and resources that would enable the business to innovate and expand across the Asia Pacific, with a greater diversity of supply and access to premium flower markets from China and Japan to Australia,” says Hasfarm CEO Aad Gordijn.
“Hasfarm’s farming operations would provide Lynch Group customers with improved security of supply, with immediate benefits for Australian retailers and consumers.
“We believe we have put forward a compelling offer to Lynch Group shareholders and look forward to working with the board to progress the scheme.”
Lynch says that major shareholders who collectively hold 38.5 per cent of Lynch’s shares have confirmed they plan to vote in favour of the scheme in the absence of a better offer.
The takeover bid comes on the heels of TPG securing a majority interest in Hasfarm in December last year, making it the private equity group’s eighth investment for its TPG Asia VIII fund.
“Hasfarm’s proposed acquisition of Lynch Group is aligned with TPG’s approach of leveraging its thematic expertise in the consumer sector, alongside its broad and deep regional presence, to build multi-regional market leaders,” says Joel Thickins, the co-head of TPG Asia.
“Leaning into transformative M&A is a proven playbook for TPG that supports rapid growth for businesses that benefit from scale.
“Together with Lynch Group, Hasfarm will have the opportunity to build a uniquely diversified, vertically integrated floriculture platform in the Asia Pacific region.”
Despite a solid underlying performance from Lynch Group in FY25, the company posted a net loss of $4.03 million for the year – a sharp improvement on the $26.05 million bottom-line loss delivered a year earlier.
The company announced in April that it was exiting three potted farms in Australia, including a greenhouse impacted by Cyclone Alfred earlier this year.
Revenue rose 8.2 per cent to $430.46 million in FY25, led by improved performances in its key markets of China and Australia.
“We were pleased with the group’s performance over the year with the second half seeing an improvement in consumer confidence and sales momentum across our markets,” says Lynch CEO Hugh Toll.
“Australia floral demand continued to be positive, supported by a customer new brand launch and SOR store conversions.
“Further, China’s improved sentiment is translating into a better sales dynamic and pricing across our channels to market, as evidenced by key events in the half.
“Supermarkets in Australia are increasingly being chosen by consumers for their floral purchases, with some way to go before they match the penetration of this category in other advanced economies.”
While the company notes revenue is up 5 per cent in the first seven weeks of FY25 in the Australian market, extreme rain and heat has led to a 14 per cent fall in the group’s China business.
Lynch Group shares were trading at $2.15, up 40c, at 10.03am.
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