SANTA PAULA, Calif. (Feb. 9, 2010) Calavo Growers, Inc. (Nasdaq-GS:CVGW), the global leader in avocado marketing and an expanding provider of other fresh perishable products, today announced the formation of majority owned Calavo Salsa Lisa, LLC, and that businesss acquisition of Lisas Salsa Company of St. Paul, Minn.
Under the terms of the transaction, Calavos expansion into the growing fresh refrigerated salsa category comes through a 65 percent ownership interest in Calavo Salsa Lisa which acquired the assets of closely held Lisas Salsa Company. Calavos ownership position comes with an option to acquire the remaining 35 percent exercisable at any time during the next eighty-one months. The new entity will be integrated into Calavos corporate structure; Lisas Salsa
Company founder Lisa Nicholson joins Calavo Salsa Lisa with responsibilities that include manufacturing operations, product development, and injecting the brand and its marketing efforts with a distinct Salsa Lisa culture. Terms were not further disclosed.
The company will continue to market the current Salsa Lisa product line through the existing network of loyal customers in the upper Midwest. In addition, initial marketing of the Calavo Salsa Lisa brand will begin immediately and the company expects to be able to begin shipments in April to both retail and food-service customers. Merchandised in grocers produce sections, the new salsa line, which will also come in a range of specialty flavors and varieties, offers a unique combination of highly appealing features: all natural product, fresh ingredients including fresh tomatoes, a long 98-day shelf life and the personal touch of a homemade recipe.
Calavos Chairman, President and Chief Executive Officer Lee E. Cole commented: We are very pleased to launch Calavo Salsa Lisa with the goal of leveraging our nationwide infrastructure and distribution channels to build a powerful market position in refrigerated salsa, which is a substantial and growing category.
Lisa Nicholson, who founded and led her company for the past fifteen years, has developed a truly outstanding product, which we believe has tremendous potential for future growth on a national scale.
This new line of delicious salsas will be a natural complement to our market leadership in ultra-high-pressure guacamole, which is a simply best-in-category product, as well as our recently introduced Calavo tortilla chips. Being able to market and ship high-end, great tasting guacamole, refrigerated salsa and tortilla chips together is a win-win-win for consumers, our customers and Calavos profit-margins. We intend to continue to leverage our refrigerated distribution channel by expanding our processed products business on a selective basis, just as we have done with our fresh products where we have added such high quality offerings as tomatoes, papayas, pineapples and mushrooms under the Calavo brand.
Nicholson stated: We are very excited about joining forces with Calavo, an industry leading company. Working together, we are confident we can build on our well-established market position in the upper Midwest and take our delicious, hand-prepared refrigerated salsa to the next level. I am very pleased to be part of the Calavo team to reach our ambitious targets for profitable growth. We believe this transaction is structured to be a game changer for both parties.
Nicholson noted that Calavo brings tremendous strengths and resources to the table including a strong, high quality brand, nationwide refrigerated logistics and distribution, a national sales and broker network, an extensive customer base, diversified distribution channels, and financial and management strength.
Calavo Salsa Lisa will be produced in St. Paul at the former Lisas Salsa Companys 8,000 square foot facility, which Calavo Salsa Lisa will expand to 10,500 square feet. The company believes that the facility has ample unused capacity to support the planned national rollout.
According to the market research firm Information Resources, salsa has surpassed ketchup as the nations favorite condiment based on sales (in dollars) reports by a rate of nearly two-to-one. Presently, the refrigerated salsa sub-category is only a fraction of the entire category, but has grown in recent years along with consumer demand for fresher and better tasting products. More broadly, the growth of the salsa category reflects consumers growing attraction to hot and spicy foods and interest in ethnic foods, as well as changing demographics including the expanding Hispanic population. Salsa, with fresh tomatoes, is highly nutritious and low in calories. Americans are now using it on a variety of foods such as baked potatoes, egg dishes and even burgers.
Cole added: The refrigerated fresh category in which Calavo Salsa Lisa will compete is notable for few large-company national competitors and greater growth opportunities. This announcement illustrates our careful, managed-risk external growth strategy, which is a key engine of our revenue and profit expansion. We intend to continue expanding both our fresh and processed product portfolios on a selective basis by folding in high-quality products under the Calavo banner to leverage further the brand equity we have built over the past 85 years.
TroyGould acted as legal advisor to Calavo Growers, Inc. in connection with the transaction. Greene Holcomb & Fisher acted as financial advisor to Lisas Salsa Company, and Fredrikson & Byron acted as legal advisor to Lisas Salsa Company in connection with the transaction.
Source: Calavo Growers Inc.
