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Seeka to acquire Australian produce business

Seeka to acquire Australian produce business Bunbartha Fruit Packers

Listed produce company Seeka Kiwifruit Industries Limited (“Seeka”) today announced that it has entered into an agreement to acquire the kiwifruit and orcharding business and assets of Australian company Bunbartha Fruit Packers Pty Ltd (“BFP”) and its associated entities for a purchase price of AUD$22 million. Once completed thisacquisition will make Seeka the largest kiwifruit grower in Australia, building on its position as New Zealand’s largest kiwifruit grower. Vendors, Jamie Craig and John Karl will be contracted to remain involved with the business on an on-going basis to ensure its success.

Settlement of the acquisition is anticipated to occur on 20 August 2015 following satisfaction of conditions usual for a transaction of this nature including FIRB approval. Seeka has established a wholly-owned Australian-based subsidiary in Australia to acquire the business and handle debt financing.

Seeka Chief Executive Michael Franks said 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.

“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” says 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 by between NZD$3.2m to NZD$4.0m, this is before any synergy gains arising from the acquisition.

“Seeka is excited by this transaction. 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 compliments Seeka’s existing offering of kiwifruit, avocados and kiwiberries. 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,” says Franks.

Seeka snapshot
Seeka is a NZX-Listed produce company headquartered in Te Puke. The primary foundation business is kiwifruit. Seeka’s kiwifruit operations span from Kerikeri to Maketu processing fruit from Northland as far afield to Waihao Bay, Mohaka and Hawke’s Bay. In addition, Seeka grows, processes and markets avocados, kiwiberries and kiwifruit to Australia and sells limited volumes of kiwifruit to other countries through the collaborative marketing mechanism. The brand “SeekaFresh” has established a strong reputation for quality and excellent service in these markets. Seeka also imports, ripens and distributes bananas and tropical fruits from the Philippines and South America within New Zealand and holds the New Zealand agency for Sumifru.

Seeka’s vision is to be New Zealand’s Premier Produce Company.

Seeka’s goal is to deliver long term growth and value to its shareholders and stakeholders. This is through targeted strategic growth within the current core business along with strategic acquisitions that deliver incremental value and growth. At the same time Seeka will review its asset and business mix to ensure that the current business assets fit with strategy. Our strategy is to “grow, harvest and deliver through an integrated supply chain”.

Seeka is close to its stakeholder growers and shareholders. It operates a lean management structure. It has committed people, clear structures and defined roles and accountabilities. It rewards delivered performance by its people.

Seeka aims to generate total shareholder returns better than the average of the NZX50.

ENDS

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