The investment is more than three times its initial Chilean investment in citrus packer Rosales in 2014. 

California-based fruit company Limoneira Company (NASDAQ: LMNR) has delivered on plans to expand its Chilean operations by acquiring the majority of northern Chilean citrus producer Pan de Azucar (PDA) for US$5.8 million.

The grower has lemon and orange orchards covering 210 acres in the La Serena area and also holds a 13% equity interest in citrus packer and marketer Rosales, which Limoneira invested in back in 2014.

Limoneira's acquisition of 90% of outstanding stock in PDA will therefore take its ownership in Rosales to 48%.

In November, 2015 during the Produce Marketing Association (PMA) Fresh Summit, Limoneira CEO Harold Edwards indicated the group was looking for new acquisitions in Chile, but today's announcement represents more than a three-fold investment in the South American country.

It is however also worth noting the U.S. dollar today is worth around 12% more against the Chilean peso than when the Rosales investment was made.

In a release, Limoneira highlighted PDA had approximately US$1.7 million in long-term debt which was assumed in the transaction, while a holdback of 10% of the purchase proceeds to be paid were withheld for a six-month period to allow for potential contingencies.

PDA's total assets are estimated at US$5.5 million, and the grower had approximately US$1.9 million in sales in the last calendar year and a net income of US$450,000.

Limoneira expects annual production to increase from these orchards because the majority of the trees in the orchard are young and will increase production as they mature.

"We are very excited about our expansion in Chile. The majority of the orchards we acquired are young and just beginning to enter into its prime production time period," Limoneira senior vice president Alex Teague said.

"Our management team has a long-standing relationship with PDA, and we are excited they are now part of the Limoneira team. 

"Along with expanding our participation in the growing global lemon business, this enables Limoneira to provide citrus on a year round basis to our customers around the world and evaluate future potential investment opportunities in Chile's vast, productive agricultural properties."

Edwards emphasized PDA's productive orchards had a favorable climate for citrus while the group's strong relationship with Rosales meant it was a perfect fit for Limoneira's international expansion plans, which more recently have also included an expansion into South Africa. 

"Our acquisition of PDA is consistent with our long-term strategy to expand our agribusiness internationally as a global, year round supplier of lemons complementing our One World Of Citrus™ strategy," Edwards said.

"We expect the acquisition to be immediately accretive and will benefit our business by owning more productive acreage and increasing our ownership in Rosales."

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