Scales Corporation Limited (NZX:SCL) has entered, through its subsidiary Mr Apple, to buy a Hawke's Bay grower-marketer for NZ$20.5 million (US$15 million). 

The deal would include 100% of shares in Longview Group Holdings Limited, a standalone grower, packer and marketer of apples.

In an announcement to the New Zealand Stock Exchange, Scales highlighted Longview leases 76ha of orchards and bare land under long-term leases.

The transaction also includes the purchase of 22ha of orchards immediately surrounding the the Longview packhouse and coolstore, as well as a further 17ha of orchards associated with shareholders.

Scales expects the purchase will raise its earnings per share by around 4% for the 2017 financial year.

"Longview is a well-established horticultural business in the Hawke’s Bay with a successful history of growing, packing, storing and marketing apples," said Scales Corporation managing director Andy Borland.

"The Longview team is highly capable and very experienced and shares a strong customer-focused and apple quality alignment with Mr Apple.

"The surrounding 22 ha of high quality orchards were purchased from longstanding Hawke’s Bay orcharders, the Caccioppoli’s."

He said Mr Apple's strategy was to become the "preferred supplier" of apples within the Asian region.

"Longview’s focus on near markets makes it a highly compelling addition to our existing operations," Borland said.

"During 2016 Longview sold 62% of the approximately 530,000 TCEs it manages to Asia.

"It was recently recognised by the China Fruit Marketing Association as one of the top 10 brands of fruit imported into China during 2016."

He said the transaction extended Mr Apple's network of independent Hawke's Bay growers by approximately 300,000 TCEs (tray carton equivalent).

“Longview operates a modern packhouse and coolstore built in 2006 with a further coolstore extension completed last year.

"The packhouse provides us with increased post-harvest capacity which we expect to fully utilise by 2020 through the ongoing maturity of redeveloped Mr Apple and Longview orchards.

"In addition, the Longview post-harvest infrastructure is close to existing Mr Apple operations and is expected to yield a number of operational efficiencies and improvements, including opportunities for improved packhouse specialisation and other revenue and cost synergies."

The transaction is expected to be completed by Nov. 7, 2016.

Photo: Mr Apple

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