Calavo adds volume with Limoneira alliance
Calavo adds volume with Limoneira alliance
Through a business transaction that resulted in each company buying a significant percentage of the other, California-based Calavo Growers Inc. and Limoneira Co. have reached a strategic alliance that is expected to strengthen both firms.
The most immediate benefit, according to Calavo's Lee Cole, is the extra 10 million pounds of California avocados now in the Calavo camp. Mr. Cole, who is chairman of the board, CEO and president of Calavo, told The Produce News that the additional tonnage "is significant. In fact, it significantly reduces our packing costs."
In a typical year, the Calavo executive said, the publicly traded firm markets between 120 million and 160 million pounds of avocados, which represent about one-third of the California crop. The addition of Limoneira not only adds 10 million pounds, but it creates synergies that will greatly benefit Calavo.
The Limoneira fruit was switched to the Calavo house about a month ago, according to Mr. Cole. He said that the state's two largest avocado growers Limoneira and the Irvine Company -- now both market through Calavo. "That should certainly make people sit up and take notice." he said.
Mr. Cole said that the company's volume has been on the rise for the past three years as more and more growers have chosen to do business with the avocado industrys largest marketer. Calavo was a co-op for many years until it changed its corporate structure a few years ago and is now traded on the NASDAQ stock exchange.
Mr. Cole said that the agreement with Limoneira called for that firm to purchase a 7 percent equity stake in Calavo, thus becoming the company's second largest shareholder. For its part, Calavo acquired a 15 percent ownership interest in Limoneira and became that companys single-largest shareholder. Mr. Cole said Limoneiras land holdings include 7,000 prime California agriculture acres, principally located in Ventura Country, including about 1,200 acres of avocados.
The Calavo CEO said that Limoneira has plans to increase its avocado acreage by at least 25 percent over the next few years. He also indicated that the land owned by Limoneira has opportunity for real-estate development, which also made it attractive to Calavo. In recent years, Calavo has branched out to diversify and increase its holdings. A few years ago it purchased Maui Fresh International Inc. and made it a wholly owned subsidiary of Calavo. That effort has given the company recent experience in selling other fresh products, as Maui Fresh is a grower-shipper-marketer of numerous items including onions, ginger and papaya.
Currently, the 112-year-old Limoneira markets its citrus products through Sunkist Growers. Mr. Cole said there have been no discussions regarding the marketing of the citrus products jointly. "I do not want to start a rumor as we have not discussed that, but we have not ruled anything out yet either."
Calavo recently relocated its corporate headquarters from Santa Ana, CA, to leased office space on the Limoneira ranch in Santa Paula, and Mr. Cole admitted that discussions about the strategic alliance have been ongoing.
Besides the marketing of the avocados, Mr. Cole said the next big step for the new alliance may well be the construction and development of a new state-of-the-art avocado packinghouse that would be constructed on Limoneira land. The Calavo president said the idea is taking shape and the packing facility could be jointly used by both companies.
In the company press release announcing the move, Mr. Cole said, "This transaction is highly significant to Calavo and its shareholders. Through its investment in Limoneira, our company strengthens its business operations through substantial incremental avocado-packing volume and gives Calavo shareholders a stake in one of the country's most diversified agribusiness and land companies. Limoneiras 7,000 acres of land provide Calavo the opportunity to benefit from future commercial, residential and recreational real-estate development, creating additional value for our shareholders.
Harold S. Edwards, Limoneira"s president and CEO said in the press release, "For Limoneira, the relationship means becoming a substantial owner of the world's leading avocado company and one of the most respected brand names in all of agribusiness. It also enables us to utilize available company office space and creates the prospect of future projects, such as the new packing facility. We are extremely pleased to become significant investors in Calavo, and are impressed with its operating strength, commanding market position and seasoned senior management team.
The most immediate benefit, according to Calavo's Lee Cole, is the extra 10 million pounds of California avocados now in the Calavo camp. Mr. Cole, who is chairman of the board, CEO and president of Calavo, told The Produce News that the additional tonnage "is significant. In fact, it significantly reduces our packing costs."
In a typical year, the Calavo executive said, the publicly traded firm markets between 120 million and 160 million pounds of avocados, which represent about one-third of the California crop. The addition of Limoneira not only adds 10 million pounds, but it creates synergies that will greatly benefit Calavo.
The Limoneira fruit was switched to the Calavo house about a month ago, according to Mr. Cole. He said that the state's two largest avocado growers Limoneira and the Irvine Company -- now both market through Calavo. "That should certainly make people sit up and take notice." he said.
Mr. Cole said that the company's volume has been on the rise for the past three years as more and more growers have chosen to do business with the avocado industrys largest marketer. Calavo was a co-op for many years until it changed its corporate structure a few years ago and is now traded on the NASDAQ stock exchange.
Mr. Cole said that the agreement with Limoneira called for that firm to purchase a 7 percent equity stake in Calavo, thus becoming the company's second largest shareholder. For its part, Calavo acquired a 15 percent ownership interest in Limoneira and became that companys single-largest shareholder. Mr. Cole said Limoneiras land holdings include 7,000 prime California agriculture acres, principally located in Ventura Country, including about 1,200 acres of avocados.
The Calavo CEO said that Limoneira has plans to increase its avocado acreage by at least 25 percent over the next few years. He also indicated that the land owned by Limoneira has opportunity for real-estate development, which also made it attractive to Calavo. In recent years, Calavo has branched out to diversify and increase its holdings. A few years ago it purchased Maui Fresh International Inc. and made it a wholly owned subsidiary of Calavo. That effort has given the company recent experience in selling other fresh products, as Maui Fresh is a grower-shipper-marketer of numerous items including onions, ginger and papaya.
Currently, the 112-year-old Limoneira markets its citrus products through Sunkist Growers. Mr. Cole said there have been no discussions regarding the marketing of the citrus products jointly. "I do not want to start a rumor as we have not discussed that, but we have not ruled anything out yet either."
Calavo recently relocated its corporate headquarters from Santa Ana, CA, to leased office space on the Limoneira ranch in Santa Paula, and Mr. Cole admitted that discussions about the strategic alliance have been ongoing.
Besides the marketing of the avocados, Mr. Cole said the next big step for the new alliance may well be the construction and development of a new state-of-the-art avocado packinghouse that would be constructed on Limoneira land. The Calavo president said the idea is taking shape and the packing facility could be jointly used by both companies.
In the company press release announcing the move, Mr. Cole said, "This transaction is highly significant to Calavo and its shareholders. Through its investment in Limoneira, our company strengthens its business operations through substantial incremental avocado-packing volume and gives Calavo shareholders a stake in one of the country's most diversified agribusiness and land companies. Limoneiras 7,000 acres of land provide Calavo the opportunity to benefit from future commercial, residential and recreational real-estate development, creating additional value for our shareholders.
Harold S. Edwards, Limoneira"s president and CEO said in the press release, "For Limoneira, the relationship means becoming a substantial owner of the world's leading avocado company and one of the most respected brand names in all of agribusiness. It also enables us to utilize available company office space and creates the prospect of future projects, such as the new packing facility. We are extremely pleased to become significant investors in Calavo, and are impressed with its operating strength, commanding market position and seasoned senior management team.
