Seeka to acquire Australian produce business

Seeka Chief Executive Michael Franks. Photo/file

Packhouse Seeka Kiwifruit Industries Limited today announced it has entered into an agreement to acquire the kiwifruit and orcharding business and assets of Australian company Bunbartha Fruit Packers Pty Ltd.

Seeka will also acquire associated entities for a purchase price of AUD$22 million.

The acquisition will make Seeka the largest kiwifruit grower in Australia which will build on its position as New Zealand's largest kiwifruit grower.

Seeka has established a wholly-owned Australian-based subsidiary in Australia to acquire the business and handle debt financing.

The purchase includes 505 hectares of land in Shepparton, Victoria, including approximately 240 hectares of orchard land - comprising 95 hectares of kiwifruit, with pears, plums, apricots and cherries on the remainder. All prime water shares linked to the properties will be acquired, said Seeka Chief Executive Michael Franks.

"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 Mr Franks.

"The purchase price is intended to be funded through debt facilities with settlement including an element of deferred payment."

BFP's business has revenue of approximately NZD$17m which would be expected to increase Seeka's EBITDA between NZD$3.2m to NZD$4.0m, this is before any synergy gains arising from the acquisition, said Mr Franks.

"Seeka is excited by this transaction. Seeka's and BFP's businesses are strategically aligned and complement each other. Seeka's current Australian sales total approximately AUD$15m.

"We expect to add further value through the synergies that both businesses can deliver to each other from internal optimisation and market expansion. We anticipate that these synergies will deliver incremental returns to our shareholders and our growers."

"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. Our current focus is on the integration of BFP into the Seeka group and putting management, compliance, safety and reporting systems in place," said Franks.

Vendors, Jamie Craig and John Karl will remain involved with the business on an on-going basis to ensure its success.

Settlement of the acquisition is anticipated to occur August 20.