Alico buying 3 Florida citrus producers
The deals, which include almost 28,000 acres of land, come at a difficult time for the citrus industry in Florida, the top supplier of U.S. oranges and orange juice. A bacterial disease—citrus greening—has devastated production and driven up prices of oranges, hurting demand for orange juice. U.S. sales for the once ubiquitous breakfast beverage fell to the lowest level in at least 16 years in the season that ended in September, according to Nielsen data.
The largest acquisition is of Orange-Co LP, which includes 20,263 acres. Alico will pay $274 million for the company, financing the deal with debt and a $97 million sale of its sugar-cane assets. Alico grows citrus and sugar cane, raises cattle, and manages land in Florida.
Alico also bought Gator Grove, a deal that closed in September and was financed with cash, and is buying Silver Nip Citrus, which is owned by 734 Agriculture LLC. A unit of 734 Agriculture, 734 Investors, is Alico’s majority shareholder.
To increase productivity, Alico will plant new trees on the land it has acquired, he said.
Sales of the juice continue to slump, however. U.S. consumers bought 37.05 million gallons of orange juice in the four weeks ended Oct. 25, down 9.4% from a similar period a year earlier, according to Nielsen data published in November by the Florida Department of Citrus.
An increase in Florida production, “if we could ever get there,” would help drive down prices and spur demand, said Jack Scoville, a vice president at brokerage Price Futures Group.
Source: wsj.com
