Limoneira Co., one of Ventura County’s biggest agribusinesses and a pillar of the Santa Paula community for 130 years, is exploring a sale, merger or buyout that would take the company private under out-of-town ownership.
In a statement released Friday, the citrus and avocado grower said it has “commenced a process to explore potential strategic alternatives aimed at maximizing value for stockholders."
The company said it has hired both a law firm and a financial adviser to evaluate potential deals.
Kyle McIntosh, a business professor at California Lutheran University, said the announcement Limoneira made is typical of publicly traded companies that want to “let the universe know they’re in play” for an acquisition.
For now, Limoneira is traded on the Nasdaq Stock Market. Investors appear to like the idea of the company going private in some manner, as the stock price shot up 20% immediately after Friday’s announcement and has continued to climb since then. Shares closed at $19.40 on Wednesday, their highest closing price in nearly four years.
Until Limoneira announced it was pursuing a deal, the value of its stock had dropped lower than when it was first listed on the Nasdaq on May 27, 2010.
Had Limoneira stock gained value at just the rate of inflation since that day in 2010, it would be worth $22.11 now. If the company had gained value at the same rate as the S&P 500, a broad-based index often used as a stand-in for the entire U.S. stock market, its shares would now be worth more than $70, or nearly five times their price before Friday’s announcement.
“The value the market perceives we have versus what we believe is the intrinsic value — there’s always been a big difference between those two things,” said Harold Edwards, who has been Limoneira’s CEO since 2004. “The idea is that maybe there’s a better way for us to operate. Maybe there’s a better ownership structure that isn’t public. Maybe it’s private, or maybe it’s merging together with another public company.”
Limoneira went public in 2010 almost by accident. The company was owned mostly by members of the families that founded it, or the families that owned farms that later became part of Limoneira. But there were so many of those owners that Limoneira exceeded the U.S. Securities and Exchange Commission’s limit for shareholders of privately held firms, and the company had no choice but to list its stock on a public exchange.
Edwards said it typically doesn’t make sense for a company as small as Limoneira to be traded publicly, because there are costs associated with offering stock to the general public and filing the required financial statements with the SEC. Investors also want consistent growth in revenue and earnings, and that's not always possible in the farm business.
Until the recent spike in value associated the planned ownership change, Limoneira’s market capitalization — the total value of all of its shares — was usually below $300 million.
“That may seem like a lot of money, but for Wall Street, it's not even worth acknowledging,” Edwards said.
The decision to explore a sale or other major transaction is the result of a re-examination of Limoneira’s business that the board of directors undertook in 2021, he said. The board decided at that time to streamline Limoneira’s operations by selling land and other assets and using the proceeds to pay down the company’s debt.
Since then, Limoneira has sold 3,500 acres of farmland in the San Joaquin Valley for about $100 million and a packing house in Oxnard for $20 million. It has paid down its debt from about $100 million to $20 million, Edwards said.
The company still farms on that land in the San Joaquin Valley and it still processes fruit at the Oxnard packing house. Instead of owning those properties, it acts as a contractor for the new owners.
That has allowed Limoneira to keep its headcount at about 350 employees while cutting costs and reducing the land it owns worldwide from 16,000 acres to 11,000, Edwards said.
The Limoneira that emerges from any future transaction to leave the Nasdaq would be very different from the one that joined the exchange in 2010. There’s no going back to ownership by the founding families and other insiders; the new owner will likely be either a larger company or a private equity firm, hedge fund or other institutional investor. The odds are that owner will have no ties to Santa Paula or Ventura County.
“We understand this is just an exploration,” said Santa Paula Mayor Andy Sobel. “But we would hope that the outcome would be that Limoneira remains part of our economic community here in Santa Paula and part of our branding as the citrus capital of the world.”
Limoneira has been a “more than exemplary” member of the Ventura County business community, said Bruce Stenslie, president and CEO of the Economic Development Collaborative. Edwards is a board member of the Camarillo-based nonprofit, which advocates for a strong business climate and offers consulting and other services to small businesses.
“I have a huge appreciation for Limoneira for several reasons,” Stenslie said. “They have some 130 years of legacy and history and leadership in Ventura County, doing it with a land stewardship ethic that has been extraordinary, setting an example for how business can be done in Ventura County and in California."
Limoneira was one of the primary sponsors of Ventura County’s 150th birthday celebration, Stenslie said. The company is also responsible for developing Harvest at Limoneira, a new residential neighborhood on the east side of Santa Paula. The county of Ventura is planning a new public hospital in Santa Paula on former Limoneira land, and the Ventura County Community College District has also had talks with the company about acquiring land for a college campus in Santa Paula.
Stenslie said he has “faith that the leadership, both their executives and on their board, will maintain their adherence to their fundamental values” when it comes to selling the company.
McIntosh, the CLU professor, worked in finance for both Amgen and Patagonia, two of Ventura County’s biggest names in business. He said it’s always possible that a new owner could move Limoneira’s headquarters or make other big changes, but he doesn’t think it’s very likely.
“The reason these companies are valuable is because of the mission and the culture,” McIntosh said. “If you’re the buyer of a company like that, if you come in and you change the mission and the culture to something that’s very slash and burn, and you change the vibe that much, the company probably becomes a lot less valuable.”
Edwards said he is mindful of Limoneira’s history and its prominence in the community. He said the board of directors — of which he is a member — has a mandate that goes beyond just finding the highest bidder and extends to “stewardship” of a company that has been based in or near Santa Paula since 1873.
“All of those issues are front and center and being contemplated and considered,” Edwards said. “I grew up here. I’m five generations deep here. This is my family’s company. It’s not a light decision, but at the same time, I believe there’s an ability to continue to operate and keep it here. It may just have a slightly different profile and ownership, but that may not necessarily be a bad thing.”
Tony Biasotti is an investigative and watchdog reporter for the Ventura County Star. Reach him at email@example.com. This story was made possible by a grant from the Ventura County Community Foundation's Fund to Support Local Journalism.
This article originally appeared on Ventura County Star: Santa Paula agribusiness Limoneira looks for new owner