ML Mac finalizes $12M buyout
ML Macadamia Orchards LP, taking a major step toward expanding into processing and marketing, said yesterday it has signed a definitive acquisition agreement to acquire Mac Farms of Hawaii LLC for $12 million in cash and stock.
The deal, originally announced as a nonbinding agreement last October, had been expected to close early this year but ran into some delays. With the definitive agreement, the transaction is expected to close this October.
ML Macadamia is the state's largest grower of macadamia nuts. Mac Farms, the second-largest processor in the state, markets macadamia nuts commercially and at retail under the brand names Mac Farms and Kona Select.
"This transaction is an ideal strategic move for our company as it will allow us to vertically integrate our traditional farming operations with effective and experienced processing and marketing operations," said Dennis Simonis, president and chief executive of ML Macadamia Orchards. "Our goal is to be the No. 1 processor and marketer of premium Hawaii macadamia products, both locally and globally."
Simonis said the acquisition effectively will double the size of ML Macadamia since both companies -- when seasonal workers are included -- have between 250 and 300 employees.
"It's hard to find good labor and everybody's short, so we have no plans of letting anyone go," Simonis said.
The partnership said a proxy statement will be mailed to its unit holders in early August. The partnership is paying $8.5 million in cash for Mac Farms' assets and debt and also giving Mac Farms 650,000 newly issued Class A partnership units that are worth about $3.5 million at yesterday's closing price of $5.41.
As part of the deal, ML Macadamia, which owns or leases 4,189 acres of orchards on the Big Island, signed a 20-year lease for the real estate and 15-acre processing plant used in the nut-processing operation by Mac Farms, which also is based on the Big Island.
In addition, ML Macadamia signed a five-year lease to harvest the 3,998-acre macadamia orchard owned by Mac Farms affiliate Kapua Orchard Estates LLC.
The combined company would control 8,187 acres of the 18,000 total harvested macadamia nut acres in the state and just more than half of the volume in pounds produced in Hawaii last year. ML Macadamia produced 21.2 million pounds of wet, in-shell nuts in 2006 while Mac Farms produced just more than 10 million, putting the combined output at just more than 31 million pounds.