Total Produce has pushed its potential revenue contribution from North America up to around $1bn (€916,000) on foot of a new acquisition.
The Dublin-based international fruit distribution business yesterday announced the purchase of a 65% equity stake in Progressive Produce, a Los Angeles-based grower, packer, and distributor of produce for the retail, wholesale, and foodservice sectors.
The 50-year-old Californian firm employs 214 people and has sales of more than $200m.
While Total — the former general produce arm of Fyffes — did not disclose the amount it is paying for the controlling stake in Progressive, it said the consideration will be satisfied by an initial payment on completion of the deal, with a further payment being made in 2019 depending on certain profit targets being met.
The group expects the deal to be earnings enhancing from the date of closing with an option to buy the remainder of the company.
“This acquisition brings its total revenue exposure in North America to circa $1bn,” said Declan Morrissey of Davy Stockbrokers.
“At first glance, Progressive Produce should be complementary to Total Produce’s existing presence on the west coast via its Oppenheimer business.
"Total Produce’s operational footprint in North America is fast becoming material to the overall group.”
Merrion’s Darren McKinley added: “We view the acquisition as attractive as we expect it to add circa 5%-7% to the bottom line with management guiding that it would be earnings enhancing from day one.
"We also like the fact that the acquisition complements the current business model and that Progressive management will resume key members of the executive board.”
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