[ad_1]
Limoneira Firm (LMNR) ($330MM market cap) is a California based mostly citrus farmer (primarily lemons, secondarily avocados) packager and part-time actual property developer that introduced on 12/1/23, they had been pursuing strategic options. From the press launch:
Scott S. Slater, Chairperson of the Board, said, “Over Limoneira’s 130-year historical past it has grown into one of many main, sustainable agribusiness corporations on this planet with over 11,100 acres of worthwhile lands, actual property properties, and senior water rights. Over the previous 18 months, we have now developed a strategic roadmap meant to boost close to and long-term shareholder worth. Right now, we think about ourselves to be in a powerful monetary place, having not too long ago diminished our web debt place and rightsized the steadiness sheet by way of our ongoing strategic shift in the direction of an asset-lighter enterprise mannequin. Given the Board’s perception that there’s a disconnect between Limoneira’s public market worth and the intrinsic worth of our Firm’s underlying belongings, the Board believes it’s the proper time to discover all strategic choices to prioritize the Firm’s development and stockholder worth.”
Final summer season, the corporate hosted an investor day the place they laid out their estimated honest market worth of LMNR’s actual property and different belongings:
Right now, the inventory trades for roughly $18/share, or a 40% low cost (60% upside) to the low finish of the above NAV (which they cite relies on current agriculture transactions). I waited a short time to purchase this one (the value has additionally are available in from the post-announcement pleasure) because it strikes me as a probably tough enterprise to promote resulting in an prolonged timeline:
- Agriculture/farming operations aren’t know as improbable companies, they’re value takers not value makers and consequently, might be very cyclical. They’re additionally capital intensive, though Limoneira is attempting to be extra of a farm administration and packaging firm, as seen above, the worth is within the land and associated belongings.
- A part of the worth is in greater or higher makes use of of the actual property, equivalent to tough to monetize water rights.
- This can be a previous firm, major employer on the town (a lot of their staff stay on property in housing owned by Limoneira), consequently, it is in all probability exhausting from a private relationship perspective to be the administration staff that sells to outsiders. Simpler to take care of the established order.
However there’s cause to consider administration does intend to promote, shortly after the strategic options announcement, they let 13D holder Peter Nolan on the board:
Limoneira Chairperson of the Board, Scott S. Slater, said, “… We’re happy to welcome Peter and consider he shall be a worthwhile asset in guiding the Firm as we proceed to execute in opposition to our strategic roadmap to boost close to and long-term worth and begin the exploration of potential strategic options aimed toward maximizing worth for our stockholders.”
Peter Nolan, Chairman of Nolan Capital, Inc. commented, “I’m excited to be becoming a member of the Board of Limoneira because it enters this part of exploring methods to unlock further worth for stockholders.”
Peter Nolan, a former PE government, owns 6% of the corporate and his household workplace has some previous expertise with actual property and agriculture companies. The 2 occasions of Nolan displaying up on the shareholder registry and strategic course of appear associated, hopefully he can assist engineer a sale right here.
In contrast to different conditions, administration does not look like an impediment right here; this article from the VC Star supplies some fascinating background on the corporate, together with the way it got here public after they tripped the SEC shareholder depend quantity and needed to record in 2010. They have not gained a lot from being public, in all probability is sensible for them to be personal once more. CEO Harold Edwards is quoted, “The worth the market perceives we have now versus what we consider is the intrinsic worth – there’s at all times been a giant distinction between these two issues. The concept is that possibly there’s a greater method for us to function. Perhaps there’s a greater possession construction that is not public. Perhaps it is personal, or possibly it is merging along with one other public firm.” Guessing we simply need to be affected person on a sale, possibly mid-to-late summer season is cheap.
Disclosure: I personal shares of LMNR
[ad_2]
