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 have 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 invaluable lands, actual property properties, and senior water rights. Over the previous 18 months, we’ve developed a strategic roadmap meant to boost close to and long-term shareholder worth. In the present day, we take into account ourselves to be in a powerful monetary place, having not too long ago lowered our internet debt place and rightsized the steadiness 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 property, the Board believes it’s the proper time to discover all strategic choices to prioritize the Firm’s progress 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:
In the present day, 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 time to purchase this one (the worth has additionally are available 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, may be very cyclical. They’re additionally capital intensive, though Limoneira is making an attempt 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 actual property, equivalent to tough to monetize water rights.
- This can be a previous firm, major employer on the town (lots of their staff dwell on property in housing owned by Limoneira), in consequence, it is in all probability laborious 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 motive to consider 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 consider he shall be a invaluable 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 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 extra 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 will help engineer a sale right here.
Not like different conditions, administration does not seem like an impediment right here; this article from the VC Star gives some attention-grabbing background on the corporate, together with the way it got here public after they tripped the SEC shareholder rely quantity and needed to listing 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 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 perhaps 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 perhaps it is merging along with one other public firm.” Guessing we simply need to be affected person on a sale, perhaps mid-to-late summer time is affordable.
Disclosure: I personal shares of LMNR
