Mission Produce has struck a deal to buy fellow major avocado supplier Calavo Growers.
The transaction, which values Calavo at around $430m, comes seven months after the California-based business said it had received a takeover approach from an unnamed suitor.
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Mission Produce, also headquartered in California, said it expects its shareholders will own just over 80% of the combined business when the deal is finalised. Investors in Calavo will hold the rest.
“This acquisition marks an important milestone for Mission and for our industry,” Mission Produce co-founder and CEO Steve Barnard said.
“When the transaction closes, we believe we will have enhanced scale and a more diversified business model and product portfolio, so that we can deliver even greater value to our customers, growers, employees, and shareholders.”
Set up in 1983, Mission Produce is best known for its avocados but it also supplies mangoes and grows blueberries.
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By GlobalDataCalavo, which is over 100 years old, also has its origins in avocados, which it now sources from California, Mexico, Peru, and Colombia. The company’s business also includes tomatoes, papayas and a range of ready-to-eat products such as guacamole and salsas. It markets its produce under its namesake brand and has private-label contracts.
Mission Produce said the deal would double the number of its packhouses in Mexico to four and help it “provide a more consistent, year-round supply”.
It also said a broader product range would boost productivity and mitigate the “seasonal troughs” in the supply of avocados.
“We believe combining with Mission represents a compelling next chapter that will enable our combined business to unlock new growth and expand the impact of our trusted Calavo brand, while also providing our shareholders with compelling value and the opportunity to participate as a shareholder of a global leader in a growing sector,” Calavo president and CEO John Lindeman said.
Lindeman was appointed Calavo chief executive last month. A former Calavo finance chief, he left the business in 2020 to join hydroponics equipment firm Hydrofarm Holdings.
Last month, Mission Produce announced John Pawlowski would be its CEO as of the close of its AGM in April and he is expected to be the combined group’s CEO. Barnard is set to become Mission Produce’s executive chairman.
Under the terms of the deal, Calavo investors will receive $27 a share, comprised of $14.85 in cash and 0.9790 shares of Mission for each share of Calavo. The boards of both publicly listed companies have approved the deal. The businesses expect to close the transaction by the end of August.
