In a move to focus on its core business, Calavo Growers Inc., a global avocado industry provider based in Santa Paula, Calif., says it is exploring the sale of its fresh-cut division — formerly RFG — to F&S Fresh Foods.
“Since I returned to Calavo as CEO in March, we have renewed our focus on our core avocado and guacamole businesses to maximize profitability, and I am pleased with the progress we have made,” Calavo Growers President and CEO Lee E. Cole said in a news release. "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.
"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,” Cole continued.
Highlights of the contemplated transaction include:
- Total transaction value of approximately $100 million, subject to customary adjustments.
- Significant reduction to Calavo’s post-transaction selling, general and administrative expenses.
- Transaction closing anticipated in second fiscal quarter of 2024.
- Expected use of proceeds includes debt reduction, growing Calavo’s core business and returning cash to shareholders.
Calavo says there can be no assurance that a definitive agreement will result from the discussions with F&S Fresh Foods and that terms are still subject to negotiation. The company will provide more information when and if a definitive agreement is executed, the release said.
Additionally, Calavo’s board of directors has declared a quarterly cash dividend on its common stock of 10 cents per share. The dividend will be paid Jan. 31 to Calavo Growers' shareholders of record as of the close of business Jan. 26, the release said.
In addition to avocados and fresh-cut fruit, vegetables and prepared foods, Calavo is a provider of tomatoes and papayas.