Santa Clara-based fresh-food company Landec Corp. has scooped up Westchester-based Yucatan Foods, which makes and markets two brands of guacamole, Yucatan and Cabo Fresh.
The deal for Yucatan closed early this month, with Landec paying $80 million for the guac-maker – $60 million in cash and $20 million in Landec stock.
“The addition of Yucatan Foods to the Landec platform is a tremendous fit, providing real momentum toward the growth of the Landec Natural Foods business,” said Jeff Cleveland, an investment-banking director at Seattle’s D.A. Davidson & Co. who helped advise on the transaction.
The guacamole market is growing about 20 percent a year in the United States, according to data provided by IRI, a market research company in Chicago. IRI estimates U.S. consumers spent about $375 million a year on guacamole.
The deal marks Landec’s first step into the guac market, Cleveland said. “I can’t think of a larger acquisition,” he said.
Cleveland said Landec was not involved in the guacamole market prior to this deal, but he sees continued growth opportunities in this niche as consumers look for cleaner and natural products.
“I don’t see this megatrend changing anytime in the near future,” he said.
Landec said it expects the Yucatan acquisition to add $27 million to $30 million of net revenue for its fiscal year ending May 26, 2019.
Yucatan also has a new facility in Guanajuato, Mexico, that will allow its two brands to expand production of guacamole products made from Mexican-grown Haas avocados. Landec said in a statement that the factory could deliver “double-digit revenue growth over the next several years” and achieve a targeted gross profit margin of 30 percent.
The Yucatan acquisition is the second deal in as many years in the avocado market that D.A. Davidson has provided financial advice on, Cleveland said. In the other deal, San Diego-based Chosen Foods, the maker of avocado oils and sauces, was acquired by Mexico-based Sesajal.
Walmart and Costco are big Landec customers.
During the three months ended Aug. 26, 2018, Landec’s top five customers accounted for 48 percent of its $124.6 million in sales, according to a filing with the U.S. Securities and Exchange Commission. In the company’s Natural Foods segment, Landec’s top two customers, Costco and Walmart, accounted for 19 percent of its $112 million in revenue, the filing said.
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L.A.’s OpenGate buys Fichet Security
Los Angeles private equity firm OpenGate Capital completed its acquisition of a division of Swedish security firm Gunnebo Group and renamed the business Fichet Security Solutions.
Terms of the transaction were not disclosed.
Fichet Security, which has operations in France, Belgium and Luxembourg, sells security services such as electronic security, doors and partitions, safes and vaults and entrance control.
Fichet is the ninth acquisition for OpenGate’s first institutional fund. Earlier deals included Power Partners, Bois & Materiaux, Energi Fenestration Solutions Ltd., Alfatherm, EverZinc, Hufcor Inc., Mersive Technologies Inc. and Jotul.
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Guardian Life buys interest in Lowes
New York-based Guardian Life Insurance Co. of America is purchasing an equity interest in Brentwood-based real-estate management company Lowe Enterprises Investors, or LEI.
LEI is currently owned by Lowe Enterprises Inc. Terms of the transaction were not disclosed, but it is expected to close this month, according to LEI.
LEI, which will remain in Los Angeles, will be renamed Broadshore Capital Partners once the transaction is completed. Broadshore will manage more than $2 billion in real estate investments.
All of LEI’s staff will transition to the new company, and LEI co-Chief Executives Bradford Howe and Bleecker Seaman III will lead the new firm. LEI’s management team will have up to a 20 percent equity interest in the new firm.
“Broadshore Capital Partners will build upon the strong relationship we have established with Guardian as we pursue strategic growth initiatives and continue our commitment to the highest level of investment management stewardship for our investors,” said Howe in a statement.
Have a deal tip? Pat Maio can be reached at [email protected] or (323) 556-8329.
