03/11/2024
Limoneira up for sale
Pioneering company will consider a host of proposals
By Frank Nelson
December’s announcement that Limoneira was exploring ownership changes for the 131-year-old citrus powerhouse has already attracted “significant interest” according to Harold Edwards, chairman and CEO of the Santa Paula-based agribusiness.
Its bid to return as a privately-held company through a sale, merger or buyout has drawn interest from large pension funds, insurance funds and investment funds operated by foreign states, Edwards said. There is also interest in Limoneira’s water rights and its move toward real estate development, a relatively new endeavor for the land-rich company.
“There’s no question that the real estate development will be one of the most important parts of the business going forward,” Edwards said.
Given the complexities of the options and the board’s commitment to careful deliberations, it could be six to 12 months before any decisions are made, he said. Word that Limoneira is courting suitors sparked apprehension within the Santa Paula community where it has been headquartered since its founding in 1893.
Henry Dominguez spent part of his youth living on Limoneira property and working briefly for the company while his father managed the former orange packing plant in Santa Paula. Today he farms 75 acres of avocados and about 25 more of lemons. He’s been growing for Limoneira since 2017 and admits he’s a little nervous about how things might work out.
“From a personal standpoint and dealing with them professionally as a grower, I’m apprehensive about any significant change…and hope they will continue to operate at the same level of professionalism and corporate responsibility,” Dominguez said.
Wall Street pressures
The company’s decision to seek restructuring, and possibly to go private, was sparked by the board’s concern that its market value on the Nasdaq–about $322 million– did not fully reflect the business’ underlying assets and potential future earnings. Publicly-traded companies typically seek steady growth while farming businesses tend to be more cyclical and unpredictable, especially in times of increasingly extreme weather.
Limoneira is a major U.S. grower, packer and distributor of lemons and avocados, with operations in California, Arizona, Chile and Argentina.
The company employs about 350 people, some 300 of them in Ventura County. In recent years it has also turned residential property development into a major revenue stream. Harvest at Limoneira, springing up across more than 500 acres of former lemon and avocado farmland near Santa Paula, is slated for 2,000 homes. So far 670 have been sold, another 554 are being marketed and down the track more land is being eyed for housing, Edwards said.
In addition, Limoneira has dipped a toe into the winery industry with a vineyard in Paso Robles, and holds valuable water resources and rights.
“Water is probably the most valuable asset that the company possesses,” Edwards said.
The company was originally owned by just eight farming families but by 2010–seven generations later–the number of shareholders had ballooned past 500. Under Securities and Exchange Commission rules, that meant the company had no choice but to go public and begin shouldering all the expense associated with reporting and regulatory demands.
“As a publicly-traded company we are just way too small to continue to bear the enormous cost of corporate compliance,” Edwards said. “We spend somewhere between $3 million and $5 million per year being publicly traded.”
Edwards says the company values its history and role in the community, and believes Limoneira will continue to play a leading role in Santa Paula for years to come.
“The heart and soul of the company is Ventura County and any buyer would be foolish to think about moving,” he said. “Plus, you can’t move 4,000 acres,” he added, referring to the area farmed by Limoneira in Ventura County, a sizeable chunk of the company’s total 11,200 acres.
Board member and former company executive, Al Guilin, does not see the changes underway as a seismic shift but rather a prudent response to current industry conditions. Guilin, who worked at the company from the mid-1960s to the late 1990s, said Limoneira has continually reevaluated crop mix, holdings and other strategic issues, a sound business approach that has served it well over the years.
Asset-lighter model
As part of a broader strategic rebalancing, Edwards said the company is easing slightly away from the role of grower to concentrate more on providing services such as farm management, packing, distribution and marketing. It is shedding under-performing or non-essential assets: last year, for example, the company sold about 3,000 acres of lemons in the San Joaquin Valley, using the roughly $100 million proceeds to pay down debt. And it will continue converting acreage from lemons to avocados.
Its heavy reliance on lemons almost undid Limoneira during the Covid-19 pandemic when bars and restaurants—making up 70% of consumed lemons—shut down. “Demand crashed,” he said. “It really put the company in a bad spot as we wrestled basically for survival.”
The recent discovery near Santa Paula of Huanglongbing (HLB), a bacterial disease which kills citrus trees, has served to underline the wisdom of expanding avocado production. Even so, Edwards says the company remains confident it can continue to farm its way through the difficult and costly threat posed by HLB.
Frank Nelson has long covered business on the Central Coast. He divides his time between New Zealand and Ventura County.
A Pioneering Ag Business
1893
Limoneira founded when Nathan W. Blanchard and Wallace Hardison purchased 413 acres of land in Santa Paula. The company’s primary crops were lemons, Valencia oranges and walnuts.
1901
C.C. Teague was named general manager, hiring university scholars to develop new growing techniques. Teague convinced other growers to band together to form the California Fruit Growers Exchange, later known as Sunkist. Teague was Sunkist’s longtime president and founded other brands including Diamond Walnut.
1944
First avocados planted on the ranch.
1985-1997
Period of expansion as Limoneira merges with other citrus growers.
2008
Limoneira receives 83% Santa Paula voter approval to proceed with its master-planned community, Harvest at Limoneira.
2010
Limoneira listed on the NASDAQ global market, leaves Sunkist co-op.
2013-2019
Limoneira expands direct marketing and selling with acreage in Chile and Argentina.
2017
Company breaks ground on first phase of Harvest at Limoneira.
2023
Limoneira board chair Scott Slater announces potential sale, merger, acquisition or buyout. Company leaders say they remain committed to Santa Paula.