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 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 the earth with over 11,100 acres of useful lands, actual property properties, and senior water rights. Over the previous 18 months, we have now developed a strategic roadmap supposed to reinforce close to and long-term shareholder worth. At this time, we take into account ourselves to be in a powerful monetary place, having lately decreased our internet debt place and rightsized the stability sheet by 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 belongings, 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 belongings:
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 is predicated on latest agriculture transactions). I waited a short while to purchase this one (the worth has additionally are available in from the post-announcement pleasure) because it strikes me as a probably tough enterprise to promote resulting in an prolonged timeline:
- Agriculture/farming operations aren’t know as incredible companies, they’re worth takers not worth makers and because of this, may 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 larger or higher makes use of of the true property, equivalent to tough to monetize water rights.
- It is a previous firm, most important employer on the town (lots of their workers stay on property in housing owned by Limoneira), because of this, 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 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, said, “… We’re happy to welcome Peter and imagine he might be a useful 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 begin 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 part 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 might 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 gives some fascinating background on the corporate, together with the way it got here public after they tripped the SEC shareholder depend quantity and needed to listing in 2010. They have not gained a lot from being public, in all probability is sensible for them to be non-public once more. CEO Harold Edwards is quoted, “The worth the market perceives we have now versus what we imagine is the intrinsic worth – there’s at all times been a giant distinction between these two issues. The thought is that possibly there’s a greater method for us to function. Perhaps there’s a greater possession construction that is not public. Perhaps it is non-public, 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