The Limoneira Company announced that it has acquired the majority of Pan de Azucar S.A. ("PDA"). PDA owns approximately 210 acres of lemon and orange orchards near La Serena, Chile and an equity interest in Rosales, S.A, ("Rosales"), a citrus packing, marketing and sales operation in La Serena, Chile.
On February 24, 2017, through its wholly owned Chilean subsidiary, Limoneira Chile SpA, Limoneira completed the acquisition of 90% of outstanding stock of PDA, for $5.8 million in cash. PDA also had approximately $1.7 million in long term debt, which was assumed in the transaction. A holdback of 10% of the purchase proceeds to be paid to the seller were withheld for a six-month period to allow for potential contingencies. PDA's total assets of approximately $5.5 million on the acquisition date includes a 13% equity interest in Rosales in which the Company owns a 35% equity investment, which was acquired in 2014. Upon completion of the acquisition, the Company will own 48% of Rosales and PDA's 10% stockholder will own the remaining 52% of Rosales. PDA had approximately $450,000 of net income on approximately $1.9 million in sales for the year ended December 31, 2016. PDA's results of operations will be included in Limoneira's consolidated results of operations from the date of acquisition. Limoneiraexpects annual production to increase from these orchards because the majority of the trees in the orchard are young and will increase production as they mature.
PDA is located in a coastal region near La Serena, Chile, which is a major citrus and avocado growing area of the country. Rosales packs and sells all of PDA's citrus production. Rosales, which primarily packs and sells citrus, partners with Limoneira's One World of Citrus™ marketing team to sell its produce in Chile and throughout the world.
Alex Teague, Senior Vice President, stated, "We are very excited about our expansion in Chile. The majority of the orchards we acquired are young and just beginning to enter into its prime production time period. Our management team has a long-standing relationship with PDA, and we are excited they are now part of the Limoneira team. Along with expanding our participation in the growing global lemon business, this enables Limoneira to provide citrus on a year-round basis to our customers around the world and evaluate future potential investment opportunities in Chile's vast, productive agricultural properties."
Harold Edwards, President and Chief Executive Officer, added, "With its favorable climate for citrus, PDA's productive orchards and strong relationship with Rosales was a perfect fit for our international expansion plans. Our acquisition of PDA is consistent with our long-term strategy to expand our agribusiness internationally as a global, year-round supplier of lemons complementing our One World Of Citrus™ strategy. We expect the acquisition to be immediately accretive and will benefit our business by owning more productive acreage and increasing our ownership in Rosales."
Investor contact:
ICR
John Mills
Tel: 646-277-1254
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