SANTA PAULA, CA - Teamwork makes the dream work, is what I always say. Proving that working together makes business stronger is Limoneira, which seeks to acquire a Chilean ranch and its related assets. The citrus company has entered the agreement to purchase the ranch—Fruticola San Pablo S.A. in La Serena, Chile, which sits on two parcels and consists of 3,317 total acres—for $13 million. Total, 247 acres produce lemons, 61 acres produce oranges, and 120 acres are up for the taking to produce even more lemons. In addition to the citrus production, the acquisition includes 500 acres of avocado production.

“The addition of the San Pablo ranch to our growing global presence is consistent with our long-term strategy to dramatically expand our agribusiness internationally as a global, year-round supplier of citrus,” Harold Edwards, President and Chief Executive Officer, said in a recent press release. “We have a very strong pipeline of potential acquisitions around the world, including the United States, and believe we are very well positioned to capitalize on this tremendous long-term growth opportunity.”

The California-based company expects to invest $2.8 million in fiscal 2018 and 2019 for new citrus plantings and better water infrastructure to expand citrus production to 650,000 cartons of lemons and 85,000 cartons of oranges annually once the ranch reaches its full maturity, according to a press release.

This acquisition of the San Pablo will increase Limoneira’s efficiencies and overall Chilean margins, especially considering the latter’s existing Pan de Azucar (PDA) sits in close proximity to San Pablo. PDA’s ownership of the Rosales packing business, in fact, aids in this transition, and now Rosales will pack and sell all of the company’s citrus in the region under Limoneira’s One World of Citrus™ marketing team.

“This acquisition enables us to utilize our existing packing operation in Chile to improve margins for San Pablo’s current and future production. In addition, we will immediately begin planting additional acreage for increased lemon production. We have known the management team at San Pablo for many years and are very excited to leverage our current assets to expand production and distribution within Chile and throughout the world,” Alex Teague, Senior Vice President, shared.

The acquisition is expected to close in July of 2018, and will add $.02 to $.03 in earnings per diluted share in fiscal 2018, and $.06 to $.08 in fiscal 2019, which is interesting when positioned with Limoneira’s recent announcement that it intends to offer and sell approximately $50 million of shares of its common stock in an underwritten registered public offering. In another press release, the company expressed that it expects to grant the underwriters for the offering a 30-day option to purchase up to an additional 15 percent of the shares of its common stock sold in the offering to cover over-allotments, if any. There can be no assurance as to whether or when the offering may be completed or the actual size or terms of the offering, as the proposed offering is subject to market and other conditions.

Proceeds from the offering, if completed, will benefit the company’s recent acquisition of San Pablo—particularly its capital expenditures in that venture, other potential acquisitions, and for general corporate purposes.

For more information on this public offering announcement, check out the press release here. For more fresh produce news, check back with us at AndNowUKnow.

Limoneira