Local Bounti Corp. has gained access to major retailers with the acquisition of fellow US vertical-farming business Hollandia Produce Group.
California-based Hollandia, which operates as Pete’s, owns two indoor greenhouse farms for leafy greens in the state and has a third under construction in Georgia, due to be completed in the second quarter. The company supplies retailers in the US and Canada including Albertsons, Kroger, Target, Walmart and Whole Foods Market.
Local Bounti, which combined last year with SPAC vehicle Leo Holdings with a listing on the New York Stock Exchange, has struck the deal for US$122.5m. The Hamilton, Montana-based business said $92.5m will be paid for Pete’s through a $200m debt financing facility with US agri-food firm Cargill and the remainder in its own shares.
Pete’s 130 employees will be retained, including the management team, taking Local Bounti’s headcount to 250.
Local Bounti plans to install its “patent-pending stack and flow technology” at the three Pete’s facilities. The company claims the kit “combines the best aspects of vertical farming and greenhouse growing technologies to deliver higher yields of diverse leafy greens at superior unit economics”.
Craig Hurlbert, Local Bounti’s co-founder and joint CEO, said: “The acquisition of Pete’s allows us to de-risk our operational execution in the near term with their proven model, while offering significant synergies to ramp their production with a retrofit of our stack and flow technology.”
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Pete’s has been in operation for more than 50 years, with its two farms located in Carpinteria and Oxnard, California. It generated estimated revenues last year of $22.7m and has posted a gross margin “greater than” 45% in the past five years, along with “positive” EBITDA.
With the Georgia farm on-stream, the business expects to “achieve initial run-rate revenue of at least $30 million at full production”.
Its CEO Brian Cook said: “For 50 years, we have been obsessed with offering high-quality products and great service, while focusing on innovation and sustainability within the indoor-farming space. By combining with Local Bounti, we scale our business and partner with a leader that shares in our philosophy.”