Foresight Sustainable Forestry Company (FSF) has agreed terms on a proposed takeover bid by Averon Park.
The 97p per share offer for the forestry investment trust’s entire issued share capital, lodged by Averon Park’s newly formed subsidiary Arizona Bidco, represents a 32.88% premium to the closing price of 73p last night (28 May).
In a stock exchange announcement this morning, the FSF board said it considers the terms of the offer to be ‘fair and reasonable’.
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Having launched in November 2021, FSF aims to make a direct contribution in the fight against climate change.
Averon Park said it shares FSF’s goals and is “well placed” to support FSF’s existing portfolio in its next phase of growth, having owned part of FSF’s assets prior to its IPO in November 2021.
Commenting on the acquisition, FSF chair Richard Davidson said: “The offer from Arizona Bidco is at a price that represents a significant premium to the volume weighted average price for the past three months.
“We believe this offer represents good value for shareholders, and therefore we are recommending it. The structure of the deal means investors can continue to participate in the compelling investment fundamentals presented by the forestry and carbon credit industries through a private structure.”
Graham Ross Russell, independent non-executive director of Averon Park, added: “Since its IPO, the FSF team has rapidly developed its portfolio to become a leading forestry and afforestation player in the UK.
“Demand for domestic sources of timber and high integrity carbon credits is increasing, and the transaction presents good value for all involved and a great opportunity to grow the portfolio.”
The trust has been trading at a 28.57% discount, according to the AIC. As of 11:15 AM, FSF’s share price has risen 30.7%% in the wake of the announcement.
“This announcement is yet another example of a trust which is trading significantly below NAV being snapped up,” QuotedData analysts said.
“The sustained discount made little sense given the company’s exposure to freehold land and meant FSF has been unable to raise capital to fund further growth, with Averon Park believing that FSF will be better able to achieve its aspirations with better access to capital as a private vehicle.
