Limoneira Firm (LMNR) ($330MM market cap) is a California primarily based citrus farmer (primarily lemons, secondarily avocados) packager and part-time actual property developer that introduced on 12/1/23, they had been pursuing strategic alternate 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 priceless lands, actual property properties, and senior water rights. Over the previous 18 months, we now have developed a strategic roadmap supposed to boost close to and long-term shareholder worth. As we speak, we take into account ourselves to be in a robust monetary place, having just lately lowered our internet debt place and rightsized the stability sheet by our ongoing strategic shift in 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 time, the corporate hosted an investor day the place they laid out their estimated honest market worth of LMNR’s actual property and different belongings:
As we speak, 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 is predicated on current agriculture transactions). I waited a short while to purchase this one (the value has additionally are available in from the post-announcement pleasure) because it strikes me as a probably troublesome enterprise to promote resulting in an prolonged timeline:
- Agriculture/farming operations aren’t know as implausible companies, they’re worth takers not worth makers and in consequence, could 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 increased or higher makes use of of the actual property, similar to troublesome to monetize water rights.
- This can be a outdated firm, primary employer on the town (a lot of their staff stay on property in housing owned by Limoneira), in consequence, it is in all probability laborious from a private relationship perspective to be the administration group that sells to outsiders. Simpler to keep up the established order.
However there’s motive to imagine administration does intend to promote, shortly after the strategic alternate 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 imagine he will likely be a priceless asset in guiding the Firm as we proceed to execute towards our strategic roadmap to boost close to and long-term worth and start the exploration of potential strategic alternate options geared 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 section of exploring methods to unlock further worth for stockholders.”
Peter Nolan, a former PE govt, 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 may help engineer a sale right here.
In contrast to different conditions, administration would not seem like an impediment right here; this article from the VC Star gives some fascinating background on the corporate, together with the way it got here public after they tripped the SEC shareholder rely quantity and needed to checklist in 2010. They have not gained a lot from being public, in all probability is smart for them to be personal once more. CEO Harold Edwards is quoted, “The worth the market perceives we now have versus what we imagine 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 manner for us to function. Possibly there’s a greater possession construction that is not public. Possibly it is personal, or possibly it is merging along with one other public firm.” Guessing we simply should be affected person on a sale, possibly mid-to-late summer time is affordable.
Disclosure: I personal shares of LMNR
