Calavo Growers Stock Jumps on $430M Takeover by Mission Produce
The cash-and-stock deal creates an avocado powerhouse, valuing Calavo at a 26% premium and aiming for $25 million in synergies.
Shares of Calavo Growers (Nasdaq: CVGW) surged in trading after rival Mission Produce (Nasdaq: AVO) announced an agreement to acquire the fellow avocado supplier in a cash-and-stock deal valued at approximately $430 million.
The transaction, announced early Wednesday, proposes to pay Calavo shareholders $27.00 per share, which represents a 26% premium to the company's 30-day volume-weighted average price. Calavo’s stock rose sharply on the news, climbing nearly 20% to trade just below the $27.00 offer price, reflecting investor confidence that the deal will close. Shares of Mission Produce were little changed.
Under the terms of the agreement, the payment to Calavo shareholders will be comprised of $14.85 in cash and 0.9790 shares of Mission Produce stock for each Calavo share. The move unites two of the most significant players in the North American fresh produce market, creating a vertically integrated giant with a vast network for sourcing, ripening, and distributing avocados.
In a statement detailing the acquisition, Mission Produce outlined the strategic rationale, highlighting the expansion of its supply base in Mexico and California. The combination is expected to generate significant efficiencies, with the companies targeting approximately $25 million in annual cost synergies within 18 months of the deal's closing.
The deal is not just about strengthening avocado operations; it also marks a significant diversification for Mission Produce. Calavo Growers, with a history stretching back to 1924, has an established prepared foods division that produces value-added products like guacamole and fresh salsas. This segment provides Mission with immediate entry into the fast-growing market for convenience-focused fresh food products.
“This transformative combination brings together two industry pioneers,” said Mission Produce’s chief executive in a statement. “It will accelerate our strategic growth, enhance our access to premium fruit, and create a platform with greater scale and diversification.”
The acquisition follows a period of mixed sentiment for the two companies. Before the announcement, analysts held a consensus 'Hold' rating on Calavo Growers, while Mission Produce maintained a 'Moderate Buy' rating, according to MarketBeat data. The combined entity will have a market capitalization of over $1.2 billion, based on current valuations.
With its headquarters in Santa Paula, California, Calavo Growers has a market capitalization of approximately $395 million and generated revenues of nearly $700 million over the last twelve months. Mission Produce, based in nearby Oxnard, California, is the larger of the two, with a market value of around $883 million and trailing twelve-month revenue of $1.39 billion.
The transaction is expected to close in the second half of the year, pending approval from shareholders of both companies and customary regulatory reviews. Investors will be closely watching the integration process and the company’s ability to realize the projected cost savings as it navigates the competitive and often volatile market for fresh produce.