Calavo Growers, the US fresh-produce group, has struck a deal to sell its fresh-cut business.
At the start of the year, the company said it was in talks – and had signed a letter of intent – to offload the assets to local peer F&S Fresh Foods for around $100m.
On Friday, Calavo Growers said it had finalised the sale of the business for $83m “subject to various closing adjustments”.
The fresh-cut assets are made up of “substantially” all of Calavo Growers’ Prepared division, other than its guacamole business, which the company is keeping.
Besides guacamole, the Prepared division comprised products including fresh-cut fruits and vegetables, ready-to-eat sandwiches, wraps, salads, snacks and salsa sold to retail and foodservice customers. It also supplied avocado pulp sold to foodservice clients.
Calavo Growers president and CEO Lee Cole said the deal “will allow us to focus on our core avocado and guacamole businesses”.
He added: “The fresh-cut business will be in the very capable hands of F&S, a leader in the industry and one of our long-trusted co-packing partners.”
In Calavo Growers’ 2023 annual report, which covered the fiscal year to 31 October 2023, Cole said the fresh-cut business “fell short of our expectations” during the period, although he added “the division’s performance did improve as the year progressed”.
In the report, Cole said the sale of the assets to F&S would “enhance shareholder value as we sharpen our focus on our core avocado and guacamole businesses and streamline our corporate structure to generate efficiency”.
He added: “While the contemplated divestiture will reduce Calavo’s top line, it will make our company better equipped to generate compelling returns for shareholders.”
In the year to the end of October 2023, Calavo Growers booked net sales of $972m, down 13% on the previous 12 months. The group made a net loss of $8.3m, versus $6.2m a year earlier.
In June, the company posted net sales of $312m for the opening half of its current financial year, a rise of 7.2%. It booked a net loss of $205,000, against $7.1m in the corresponding period the previous year.
