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 alternate options. From the press launch:
Scott S. Slater, Chairperson of the Board, acknowledged, “Over Limoneira’s 130-year historical past it has grown into one of many main, sustainable agribusiness firms on the planet with over 11,100 acres of helpful lands, actual property properties, and senior water rights. Over the previous 18 months, we’ve got developed a strategic roadmap supposed to reinforce close to and long-term shareholder worth. At this time, we think about ourselves to be in a robust monetary place, having lately lowered our internet debt place and rightsized the steadiness sheet via 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 property, 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 truthful market worth of LMNR’s actual property and different property:
At this time, 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 latest 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 doubtlessly tough enterprise to promote resulting in an prolonged timeline:
- Agriculture/farming operations aren’t know as incredible companies, they’re value takers not value makers and in consequence, 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 property.
- A part of the worth is in greater or higher makes use of of the true property, comparable to tough to monetize water rights.
- This can be a outdated firm, major employer on the town (lots of their workers dwell on property in housing owned by Limoneira), in consequence, it is in all probability onerous from a private relationship perspective to be the administration group that sells to outsiders. Simpler to take care of the established order.
However there may be 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, acknowledged, “… We’re happy to welcome Peter and imagine he will likely be a helpful asset in guiding the Firm as we proceed to execute in opposition to our strategic roadmap to reinforce close to and long-term worth and start the exploration of potential strategic alternate 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 exhibiting up on the shareholder registry and strategic course of appear associated, hopefully he may help engineer a sale right here.
Not like different conditions, administration would not seem 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 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’ve got versus what we imagine is the intrinsic worth – there’s all the time been an enormous distinction between these two issues. The concept is that possibly there’s a greater means 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 must be affected person on a sale, possibly mid-to-late summer time is cheap.
Disclosure: I personal shares of LMNR
