Calavo Growers, the US fresh produce group, has signed an agreement to sell its fresh-cut business.
Earlier this year, the company said it was in talks – and had signed a letter of intent – to sell the assets to local competitor F&S Fresh Foods for around $100 million.
On Friday, Calavo Growers announced that the sale of the company for $83 million had been completed “subject to various closing adjustments.”
The Fresh Cut assets consist of “substantially” all of Calavo Growers’ Prepared division, with the exception of the Guacamole business, which the Company retains.
In addition to guacamole, the Prepared division included products such as fresh-cut fruits and vegetables, ready-to-eat sandwiches, wraps, salads, snacks and salsa, which were sold to retail and foodservice customers. It also supplied avocado pulp, which was sold to foodservice customers.
Calavo Growers President and CEO Lee Cole said the deal “will allow us to focus on our core avocado and guacamole businesses.”
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He added: “The fresh-cut business is in the very capable hands of F&S, an industry leader and one of our long-standing, reliable co-packing partners.”
In Calavo Growers’ 2023 annual report, which covers the fiscal year ending Oct. 31, 2023, Cole said the fresh-cut business “fell short of our expectations” during that period, but added that “the division’s performance improved throughout the year.”
In the report, Cole said the sale of the assets to F&S will “increase value for shareholders as we increase our focus on our core avocado and guacamole businesses and streamline our corporate structure to achieve greater efficiencies.”
He added: “While the proposed divestiture will reduce Calavo’s revenues, it will improve our company’s ability to deliver attractive returns to shareholders.”
In the year ended October 2023, Calavo Growers reported net sales of $972 million, down 13% from the previous 12 months. The group made a net loss of $8.3 million, compared to $6.2 million in the previous year.
In June, the company reported net sales of $312 million for the first half of the current fiscal year, an increase of 7.2 percent. The net loss was $205,000, compared to $7.1 million in the corresponding period last year.
