CROSS-BORDER ACQUISITION DEAL IN FINAL STAGES
By Greenhouse Canada
By Greenhouse Canada
“We will become one of the only North American greenhouse producers with substantial year-round and diversified production from our own facilities.”
Hot House Growers Income Fund (TSX: VEG.UN) has signed a definitive acquisition agreement with the owners of Village Farms which, upon closing, will create North America’s largest producer, marketer and distributor of greenhouse-grown produce.
Under the terms of the transaction, the businesses of Hot House Growers Inc. (HHGI) and Village Farms will be aligned. The owners of Village Farms will acquire exchangeable securities in a subsidiary of the Fund which, if exchanged for units, would represent a majority interest in the Fund. The transaction is subject to unit-holder and regulatory approval and closing of contemplated equity and debt financings.
Once the deal is completed, Hot House Growers Income Fund will be reorganized and renamed “Village Farms Income Fund.” The combined entity will operate numerous modern production centres in British Columbia, Texas and Pennsylvania producing tomatoes, bell peppers and cucumbers. In the tomato category, the combined annual production capacity of some 140 million pounds, which includes product marketed under exclusive and non-exclusive arrangements with other technologically advanced greenhouse growers based primarily in Mexico, is estimated by management to represent approximately 11 per cent of the total U.S. greenhouse tomato industry.
“While both companies are sophisticated growers of premium quality, greenhouse produce, Village Farms’ year-round production will harmonize Hot House Growers’ peak growing season of April to September,” said Stephen Fane, president and CEO of HHGI. “By aligning these two businesses, we are gaining the year-round production needed to provide more predictable and stable cash flows, make available uninterrupted service to retail customers, and take advantage of the higher margins available during the October-to-March period.”
Village Farms’ CEO Michael DeGiglio added that one of the important strengths his company brings to HHGI is its vertically integrated organization, including internal sales, marketing and logistics capabilities. The Village Farms’ brand is already established and very successful with North American grocery retailers such as Ahold USA, Albertson’s Inc., Goulb Corp./Price Chopper, HEB Grocery Company, Market Basket, Meijer, Inc., Publix Super Markets, Inc., Richfoods, Inc., Safeway Inc., SuperValu Inc., United Supermarket, Wegmans Food Markets Inc, Weis Markets, and Whole Foods Market, and key distributors like C&S Wholesale Grocers.