Mission Produce to Acquire Calavo in $430M Avocado Mega-Merger
The deal unites two of the world's largest avocado suppliers, aiming to enhance scale in North America and diversify into prepared foods. AVO shares rise after initial dip.
Mission Produce (NASDAQ: AVO) has entered into a definitive agreement to acquire its longtime rival, Calavo Growers (NASDAQ: CVGW), in a cash-and-stock deal valued at approximately $430 million. The move will create a global powerhouse in the avocado market, combining two of the industry's most significant players.
Under the terms of the agreement, Calavo shareholders will receive $27.00 per share, which consists of $14.85 in cash and 0.9790 shares of Mission stock. The offer represented a significant 26% premium over Calavo's recent average share price at the time of the announcement. Following the news, shares of Calavo Growers surged, while Mission's stock initially dipped on concerns about the premium and share dilution before recovering.
In recent trading, Mission Produce shares were up approximately 4.5% to $13.12, suggesting growing investor confidence in the long-term strategic value of the consolidation. Calavo Growers' stock was trading around $26.35, holding the premium offered in the acquisition.
Strategic Rationale and Synergies
The acquisition is a strategic play to bolster Mission's leading position in the North American avocado market, expand its sourcing footprint, and diversify its product portfolio. The merger is expected to create a larger, more diversified player in fresh produce and prepared foods, including guacamole and other value-added products.
"This transaction unites two industry pioneers and is a significant milestone in Mission's journey to accelerate its growth and create shareholder value," said a Mission Produce spokesperson in a statement. The company highlighted the potential to leverage its advanced distribution infrastructure and operational technology across Calavo's customer base.
Mission Produce announced that it anticipates achieving approximately $25 million in annual cost synergies within 18 months of the deal's closing. These savings are expected to come from enhanced operational efficiencies and better utilization of the combined company’s assets.
While defensive measures like shareholder rights plans, or 'poison pills,' are often deployed to fend off unsolicited takeover bids, this transaction sees Mission Produce firmly in the role of acquirer, proactively seeking to expand its market share and capabilities.
Market and Analyst Reaction
The initial market reaction was mixed. Mission's stock fell nearly 5% in the session following the announcement, which analysts attributed to the significant premium being paid for Calavo and the dilutive effect of the stock issuance. However, the subsequent rebound points to a recalibration of sentiment as the market digests the deal's strategic benefits.
Analysts have been largely supportive of the merger's logic. Ben Klieve, an analyst at Lake Street, reiterated a 'Buy' rating and an $18 price target on Mission's stock, noting the deal's potential to expand scale and accelerate diversification. Similarly, Stephens resumed coverage with an 'Overweight' rating and a $17 price target, citing Mission's enhanced competitive advantage through greater vertical integration.
Roth Capital also viewed the deal as "highly positive", expecting the combined entity to capture a larger share of the market by leveraging superior technology and supplier relationships.
The Path Forward
The transaction, which is expected to close by the end of August 2026, is still subject to customary closing conditions, including regulatory approval and the approval of both Mission and Calavo shareholders. Upon completion, current Mission Produce shareholders are expected to own approximately 80.3% of the combined company.
This landmark deal reshapes the landscape of the global avocado industry, creating a single, vertically integrated entity with unparalleled sourcing, production, and distribution capabilities. The combined company will be better positioned to navigate the complexities of the global supply chain and capitalize on the world's growing appetite for avocados.