New Zealand-listed produce company Seeka Kiwifruit Industries has announced that it has entered into an agreement to buy the kiwifruit and orchard business and assets of Australian company Bunbartha Fruit Packers for A$22m.
Once completed, the acquisition will make Seeka the largest kiwifruit grower in Australia, building on its position as New Zealand’s largest kiwifruit grower, Seeka said in a media statement.
Seeka chief executive Michael Franks said the purchase includes 505ha of land in Shepparton, Victoria, including approximately 240ha of orchards. The orchard land comprises around 95ha of kiwifruit plantings, with pears, plums, apricots and cherries making up the remainder. The transaction also includes all prime water shares linked to the properties.
“The purchase will be made without a crop, with the first harvest of cherries to start in November 2015. 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,” said Franks.
Jamie Craig and John Karl, who currently own and operate Bunbartha Fruit Packers, will be contracted to remain involved with the business on an ongoing basis by Seeka. Franks told Produce Plus that Seeka will appoint its own operations manager to run the orchard and post-harvest business, with technical support provided by Karl, and Craig continuing to lead sales.
The acquistion is expected to go through on 20 August after the standard conditions for such a transaction are met. Seeka has established a wholly-owned Australian-based subsidiary in Australia in order to acquire the business and handle debt financing.
“Seeka is excited by this transaction,” said Franks. “Seeka’s and BFP’s businesses are strategically aligned and complement each other. 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.”
Franks said he saw potential to grow BFP’s current Australian sales, which currently total around A$15m. “We expect to add further value through the synergies that both businesses can deliver to each other from internal optimisation and market expansion,” he said. “We anticipate that these synergies will deliver incremental returns to our shareholders and our growers.”
Franks told Produce Plus that it would be very much ‘business as normal’ for BFP after the acquisition. “Our first priority is to learn about the business and ensure management and systems continue to run smoothly,” he said. “We want to maximise what we’ve got rather than making any substantial new investments but we will be investing in the post-harvest infrastructure."
The move into Australia marks a further diversification for Seeka, which has been seeking to widen its business interests beyond New Zealand kiwifruit over the past five years.
“After we got hit in New Zealand with Psa in 2010, Seeka developed a strategy to become more of a diversified produce company,” Franks told Produce Plus. “Our primary foundation business is kiwifruit but we’ve also been developing our avocado and kiwiberry business and last year we bought Sumifru New Zealand, which imports, ripens and distributes bananas and tropical fruit from the Philippines and South America.”