Calavo Growers, the US-based fresh-produce supplier, is in talks to sell its pre-prepped fresh-cut fruit and veg operation to local peer F&S Fresh Foods for around $100m.
The Nasdaq-listed company, which also produces tomatoes and papayas and prepared foods such as guacamole and salsa, said it wants to concentrate on those operations.
Calavo acquired the fresh-cut fruit and vegetables business from Renaissance Food Group in 2011 but CEO Lee Cole said its sale now will help the company to “maximise profitability”.
He added: “To dedicate more focus to our core and to maximise shareholder value, we have been exploring strategic alternatives for our fresh-cut business, previously known as RFG.
“I am pleased to share that we have signed a non-binding letter of intent to evaluate a sale of our fresh-cut business and some related real estate with F&S Fresh Foods, a leader in the industry and one of our long-trusted co-packing partners.”
New Jersey-based F&S distributes fresh-cut fruit and vegetables and meal and snacking solutions to nearly 100m customers daily. Its brands include Sam’s Fresh Salsa and Garden Pure.
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It has 650,000 sq ft of facilities and processes more than 100m pounds of produce annually for retail, foodservice and industrial customers.
Just Food has asked F&S for its comments on the planned acquisition.
Calavo, which distributes produce under its own brand name and also on a private-label basis, said when the deal completes it expects to use the proceeds for debt reduction, growing our core businesses and returning cash to shareholders.
The company, which supplies retail and foodservice, has processing plants and packing facilities throughout the US and Mexico.
Calavo also announced yesterday (16 January) its results for the fiscal year ended 31 October, due yesterday, are to be filed late.
The company said the late filing is the result of an investigation it is carrying out into its Mexican operation.
A special committee it established to look into the issue needs further time to look into “certain matters relating to the company’s operations in Mexico”, it said in a stock exchange statement.
It added: “The company does not believe that any of the matters under investigation affect any previously-issued financial statements.”
Calavo expects to report its net sales decreased around 18% year-on-year to $972m for the fiscal year.
