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 were pursuing strategic alternatives. 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 firms on the earth with over 11,100 acres of invaluable lands, actual property properties, and senior water rights. Over the previous 18 months, we’ve got developed a strategic roadmap supposed to boost close to and long-term shareholder worth. Right this moment, we think about ourselves to be in a powerful monetary place, having not too long ago diminished our internet debt place and rightsized the stability 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 belongings, the Board believes it’s the proper time to discover all strategic choices to prioritize the Firm’s development and stockholder worth.”
Final summer time, the corporate hosted an investor day the place they laid out their estimated honest market worth of LMNR’s actual property and different belongings:
Right this moment, 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 relies on latest agriculture transactions). I waited a short while to purchase this one (the value has additionally are available 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 unbelievable companies, they’re value takers not value makers and in consequence, might 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 increased or higher makes use of of the actual property, similar to tough to monetize water rights.
- It is a outdated firm, major employer on the town (a lot of their workers dwell on property in housing owned by Limoneira), in consequence, it is most likely arduous from a private relationship perspective to be the administration crew that sells to outsiders. Simpler to take care of the established order.
However there may be cause to consider administration does intend to promote, shortly after the strategic 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 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 further worth for stockholders.”
Peter Nolan, a former PE government, owns 6% of the corporate and his family office 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 may also help engineer a sale right here.
In contrast to different conditions, administration would not look like an impediment right here; this article from the VC Star offers some fascinating background on the corporate, together with the way it got here public after they tripped the SEC shareholder rely quantity and needed to record in 2010. They have not gained a lot from being public, most likely is sensible for them to be personal once more. CEO Harold Edwards is quoted, «The worth the market perceives we’ve got versus what we consider is the intrinsic worth – there’s all the time been an enormous distinction between these two issues. The concept is that possibly there’s a greater means for us to function. Possibly there’s a greater possession construction that is not public. Possibly it is personal, or possibly it is merging along with one other public firm.» Guessing we simply must be affected person on a sale, possibly mid-to-late summer time is cheap.
Disclosure: I personal shares of LMNR