Landec Corp.’s $80 Million Acquisition of ucatan Foods, L.P.

D.A. Davidson & Co. served as exclusive financial advisor to Landec Corporation in the transaction. Blank Rome advised Yucatan Foods, L.P.

Landec Corporation (Nasdaq: LNDC) wholly-owned subsidiary Apio, Inc., has acquired Yucatan Foods, L.P., headquartered in Los Angeles, CA, and a leading processor and marketer of authentic Mexican guacamole made from 100% clean ingredients. The acquisition of Yucatan Foods enables Landec Natural Foods to grow, strengthen and stabilize its position in the natural foods market, creating critical mass in LNF to better position Landec to evaluate long-term strategies for the Company’s two business segments in order to maximize shareholder value. The acquisition of Yucatan Foods is expected to be accretive to the Company’s earnings beginning in fiscal year 2020.

With annual revenues of approximately $55 million to $60 million, Yucatan Foods is projecting significant growth due to its flavorful and authentic products, as well as tailwinds in the rapidly growing guacamole category. The guacamole category in the U.S. is approximately $375 million in consumer retail dollars and is growing at an estimated 20%, according to IRI data for the 52-weeks ended October 7, 2018. Category growth is projected to continue as current household penetration of guacamole is estimated at only 21% within the U.S.

With its two guacamole brands, Yucatan® and Cabo Fresh®, and a newly built production facility in Guanajuato, Mexico, Yucatan Foods has the potential to deliver double-digit revenue growth over the next several years and achieve a targeted gross profit margin of approximately 30%. The Yucatan brand provides traditional, authentic Mexican taste and can be typically found in the deli department of retail stores. The Cabo Fresh brand targets plant-forward food consumers, offering new experiences with guacamole and is typically found in the produce department. The new facility in Mexico has the necessary capacity to support three times the existing revenues of these two brands with only modest incremental capital investments.

A Blank Rome team represented Yucatan Foods, L.P. with a team including Jason S. Kim (Picture), Joseph M. Doloboff and Richard Chou.

Involved fees earner: Richard Chou – Blank Rome LLP; Joseph Doloboff – Blank Rome LLP; Jason Kim – Blank Rome LLP;

Law Firms: Blank Rome LLP;

Clients: Yucatan Foods L.P.;

Author: Ambrogio Visconti