Calavo Growers, a California company known for marketing avocados, recently signed a purchase agreement to acquire Renaissance Food Group. Renaissance is a producer of fresh foods, selling prepared fruits and vegetables, party trays, sandwiches and wraps. The prepared foods are sold in supermarkets under private labels, along with its company label, Garden Highway. Its sales are expected to be in excess of $100 million this year.

According to the purchase agreement, Calavo paid a total of $96 million for Renaissance, including $15 million in cash plus approximately $1 million in Calavo stock. The bulk of the purchase price, however, will be paid over the next five years. This money is expected to come from performance payments earned by the Renaissance business, something that Calavo management expects to double or maybe even triple during that time period. 

The management team of Renaissance, along with 400 employees, will remain working for the business of Renaissance under their new owner. Also six distribution centers operated by Renaissance will be transferred to Calavo under the terms of the agreement.

Calavo, which was created in 1924 as an avocado co-op, is now a public company. Calavo has become known as a major distributor of domestic and imported avocados in the U.S. The company has been expanding its products to include fresh guacamole, and it also recently acquired a fresh salsa, hummus and tortilla chip company.

Calavo hopes that with this acquisition it will be able to compete as a fresh food company and a fruit and vegetable marketer against some of the largest food distributors in the industry. Considering that consumers want to eat healthier, but do not have time to prepare fresh foods themselves, Calavo believes that it is positioning itself strategically to take over this market.

Source: Pacific Coast Business Times, "Calavo bags fresh food firm of $96M", Marlize van Romburgh