Calavo Growers, the US-based fresh-produce supplier, is currently engaged in negotiations to sell its pre-prepped fresh-cut fruit and veg operation to local peer F&S Fresh Foods for an estimated $100m. The Nasdaq-listed company, which also produces tomatoes and papayas and prepared foods such as guacamole and salsa, explained that 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 stated that its sale will help the company to “maximize profitability.”
“To dedicate more focus to our core and to maximize shareholder value, we have been exploring strategic alternatives for our fresh-cut business, previously known as RFG,” Cole added. “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, with brands including Sam’s Fresh Salsa and Garden Pure.
Calavo also announced that it plans to dedicate the proceeds from the sale towards debt reduction, the growth of 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 said its late filing on the results for the fiscal year ended 31 October is due to an investigation 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.
Calavo expects to report its net sales decreased around 18% year-on-year to $972m for the fiscal year. The company does not believe that any of the matters under investigation affect any previously-issued financial statements.
