Seeka Kiwifruit Industries, the country’s biggest kiwifruit grower, has agree dot buy Australia’s Bunbartha Fruit Packers for A$22 million, making it the biggest kiwifruit grower on both sides of the Tasman.
The deal is expected to be completed on Aug. 20, subject to regulatory approvals including Foreign Investment Review Board sign-off. Seeka has set up an Australian-based subsidiary to acquire the business, it said in a statement. The purchase will be funded through debt facilities and includes a deferred payment element, while sellers Jamie Craig and John Karl will continue to be involved in the Australian business.
Bunbartha generates annual revenue of $17 million, and is expected to lift Seeka’s earnings before interest, tax, depreciation and amortisation by between $3.2 million and $4 million. Seeka will acquire 505 hectares of land in Shepparton, Victoria, and all prime water shares linked to the properties.
“The fruit produced and marketed by BFP (Bunbartha Fruit Packers) broadens and complements Seeka’s existing offering of kiwifruit, avocadoes and kiwiberries,” chief executive Michael Franks said. “We expect to add further value through the synergies that both businesses can deliver to each other from internal optimisation and market expansion.”
In June, Seeka reported a better-than-expected harvest for the 2015 season, which would likely be positive for earnings, but crimp tray returns from global marketer Zespri International due to the bigger crop.
Seeka said it will continue to look for acquisition opportunities, and is reviewing its mix of assets to ensure they fit with the company’s strategy.
“Our current focus is on the integration of BFP into the Seeka group and putting management, compliance, safety and reporting systems in place,” Franks said.
The shares were unchanged at $3.15 and have declined 2.5 percent this year. The announcement was made just before trading closed.