December 3, 2018 / 6:52 PM / 10 days ago

Walmart supplier Landec acquires Yucatan Foods for about $80 million

NEW YORK (Reuters) - Landec Corp (LNDC.O), a fresh food supplier to retailers like Walmart Inc (WMT.N), said on Monday it has acquired guacamole company Yucatan Foods for approximately $80 million, a move that should strengthen its position in the natural foods market.

Yucatan, which processes and markets two guacamole brands Yucatan and Cabo Fresh, has annual revenue of $55 million to $60 million. The acquisition should add to Landec’s earnings beginning in fiscal year 2020, the company said in a statement.

The U.S. guacamole market in the United States is about $375 million and is growing at about 20 percent a year, according to data from IRI.

“Not only will Yucatan Foods deliver incremental revenues and profits to Landec, but the guacamole business is a higher gross margin business,” Landec Chief Executive Molly Hemmeter said in a statement.

Hemmeter said the guacamole business has more stable costs than Landec’s existing packaged fresh vegetable business.

On a reported basis for fiscal year 2019, Landec expects the acquisition to add about $27 million-$30 million of net revenue, but to reduce earnings by 12 to 15 cents per share, the company said. The company is expected to post earnings of 42 cents per share for fiscal year 2019, according to IBES Refinitiv.

Reporting by Nandita Bose in New York; Editing by David Gregorio

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