NZ: Seeka buys Aussie produce company
The purchase will make Seeka Australia's largest kiwifruit grower, a position it already holds in New Zealand.
Bunbartha Fruit Packers (BFP) owners Jamie Craig and John Karl will remain involved with the business on an ongoing basis to ensure its success, according to a release.
The acquisition of the Victoria-based organization is expected to be settled on August 20, pending approval from regulator the Foreign Investment Review Board (FIRB).
Seeka has established a wholly-owned Australian-based subsidiary to acquire the business and handle debt financing.
Seeka CEO Michael Franks said the purchase involved 505 hectares of land in Shepparton, Victoria. This includes 240 hectares of orchard land, of which 95 hectares is made up of kiwifruit, with the rest dedicated to pears, plums, apricots and cherries.
All prime water shares linked to the properties will be acquired.
"The purchase will be made without a crop, with the first harvest of cherries to start in November 2015," Franks said.
"There is potential in the transaction to expand the orcharding area over time and Seeka expects profits from the purchase to occur in the 2016 financial year.
"The purchase price is intended to be funded through debt facilities with settlement including an element of deferred payment."
Bunbartha has a revenue of around NZD$17 million (US$11.1 million), which would be expected to increase Seeka's operating profit by between NZD$3.2-4 (US$2.1-2.6 million).
“Seeka is excited by this transaction. Seeka’s and BFP’s businesses are strategically aligned and complement each other," Franks added.
"Both sell to similar customers at different times of the year, and now have the opportunity to integrate selling and marketing operations.
"The fruit produced and marketed by BFP broadens and complements Seeka’s existing offering of kiwifruit, avocados and kiwiberries."
Seeka's current Australian sales total approximately AUD$15 million (US$11 million), and Franks anticipates further value will be added through 'internal optimisation and market expansion'.
"Seeka will continue to seek value-accretive acquisition opportunities while at the same time reviewing its current mix of asset holdings to ensure they fit consistently with strategy and earn their cost of capital," he said.
"Our current focus is on the integration of BFP into the Seeka group and putting management, compliance, safety and reporting systems in place."