Brisbane-based Buderim Group Limited (ASX: BUG) has reached an agreement to give up 13% of its stock to Royal Hawaiian Orchards (RHO) in exchange for the company's brand, which will make it the largest retail marketer of macadamias in the United States.

The shares were worth AUD$3.25 million (US$2.53 million) at the time of writing. 

"This transformational acquisition provides a platform for the group to become a global leader, reflecting our renewed strategic focus on leading our chosen markets and segments," said Buderim Group CEO Andrew Bond.

Buderim will take this leadership position thanks to the combination of RHO with its existing MacFarms brands, each with its own distinct marketing and distribution approach.

MacFarms' marketing focuses on the provenance of 'Fresh from Hawaii' with the product widely available in Hawaii as well as Costco stores around the world. The Royal Hawaiian Orchards brand is more focused on the healthy-snack market with gluten-free and non-GMO products, distributed to thousands of stores across the U.S. including Whole Foods Market.

Bond believed there would be significant growth potential for the healthy leisure food, rich in vitamins and minerals.

"This acquisition will also have an immediate positive impact on the business, and be earnings accretive from the outset," he said.

Retiring chairman Steve Morrow highlighted the group's regained focus on execution since welcoming new investors last year.

"The transaction delivers on our objectives and enables us to become a leading macadamia marketer in global terms by ensuring the company moves forward in generating profitable growth first in the USA, then in China where the market has become accessible through our relationships," Morrow said.

"It is pleasing to see this transformational transaction which will help the company become a leading player in the macadamia industry especially into the important markets of North America, and throughout Asia," added newly appointed chairman Guy Cowan.

The transaction is not subject to shareholder approval.

For the nine months to September last year, RHO branded products achieved normalized operating income of US$1 million. The company is the largest owner of macadamia orchards in the United States with annual production of 10,432 metric tons (MT).

Buderim owns the single largest macadamia orchard in Hawaii with production of 4,989MT per year. Combined, both companies account for 65% of U.S. macadamia production.

Upon completion the transaction will give Buderim RHO's sales and marketing functions, IP and brands, and a long-term supply agreement to ensure future supply of macadamias in line with expected growth.

The two companies have also indicated they will work closely together in pursuing efficient orchard management and output with the goal of setting industry-leading practices through automation and data analytics.

The automation angle is key, as  RHO's orchards are mostly machine harvested whereas Buderim's orchard is currently picked by hand.

A feasibility study is also planned with a view to establishing a processing plant in Hawaii by 2020.

"This transaction allows us to focus on our orchard business while continuing to participate in the branded products through ownership in Buderim," said RHO CEO Brad Nelson.

"We are excited to become a major shareholder of Buderim, and look forward to supporting its growth by ensuring that we continue to invest in optimising and expanding our production capacity and capability."

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