Calavo Growers (CVGW) stock rallied 13% in Wednesday’s after-hours trading on news of the company’s acquisition by avocado producer Mission Produce (AVO) in a deal valued at $430 million. Calavo Growers is a provider of fresh avocados, tomatoes, papayas, and value-added prepared foods such as guacamole. The acquisition is expected to be completed by August 2026, subject to regulatory approvals.
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Here Is Why Mission Produce Is Acquiring Calavo Growers
Under the deal, Mission Produce will pay Calavo shareholders $27 per share, including $14.85 in cash and 0.9790 shares of AVO for each share of CVGW. Following the completion of the deal, Mission Produce shareholders will own about 80.3% of the combined company, while Calavo shareholders will own the remaining 19.7%. Overall, the deal is valued at a total enterprise value of about $430 million. The transaction price reflects a 26% premium to Calavo’s 30-trading day volume weighted average price of $21.41.
Mission Produce expects its vertically integrated platform and global distribution network to be enhanced by Calavo’s complementary sourcing, prepared foods capabilities, and solid customer base. Furthermore, the deal is expected to bolster Mission Produce’s position in the premium avocado market in North America and help in establishing a fresh produce platform to capture the rising demand for healthy and convenient foods.
Mission Produce expects the Calavo acquisition to generate $25 million in annualized cost synergies within 18 months following the completion of the deal. The company expects the deal to significantly boost its EBITDA (earnings before interest, taxes, depreciation, and amortization) growth and cash flow generation.
Is AVO Stock a Buy, Sell, or Hold?
Currently, Roth MKM analyst has a Buy rating on Mission Produce stock with a price target of $17, indicating a 34% upside potential.
Meanwhile, Calavo Growers has not been assigned any ratings over the past three months.
