Calavo Growers Inc (NASDAQ:CVGW) stock rose 12.13% (As on January 15, 11:24:30 AM UTC-4, Source: Google Finance) after the company reported fourth quarter earnings that fell short of analyst expectations, as declining avocado prices and volumes weighed on the company’s performance. The avocado distributor also announced a strategic merger with Mission Produce. Mission is a leading global supplier of avocados with fully integrated operations, including value-added services such as ripening, packaging, regional distribution, and logistics supported by state-of-the-art infrastructure. The addition of Calavo is expected to create a scaled North American avocado and fresh produce platform well positioned to expand internationally and accelerate Mission’s business model diversification by expanding its presence in the high-growth prepared foods segment following closing.
Moreover, under the terms of the Agreement, Calavo stockholders will receive $27.00 per share (based on the 30-trading day volume weighted average price of Mission common stock for the period ending January 13, 2026), comprised of $14.85 in cash and 0.9790 shares of Mission for each share of Calavo. Upon close, based on the shares currently outstanding, Mission shareholders are expected to own approximately 80.3% of the combined company and Calavo shareholders are expected to own approximately 19.7%. The transaction values Calavo at a total enterprise value of approximately $430 million. The transaction price represents a premium of approximately 26% to Calavo’s 30-trading day volume weighted average price of $21.41. The Boards of Directors of both companies have approved the transaction, which is expected to close by the end of August 2026, subject to the receipt of required regulatory approvals.
CVGW in the third quarter of FY26 has reported the adjusted earnings per share of 25 cents, missing the analysts’ estimates for the adjusted earnings per share of 38 cents. The company had reported the adjusted revenue declined to $124.7 million in the third quarter of FY26, missing the analysts’ estimates for revenue of $2.47 billion. Fourth quarter revenue was impacted by a 19% decline in average price per carton and a 5% decrease in total cartons sold. The company attributed these declines to increasing avocado supply and a pricing reset that intensified late in the quarter. Adjusted EBITDA from continuing operations decreased 24% to $5 million compared to $6.6 million in the prior year quarter.
Looking ahead to the first quarter of fiscal 2026, Calavo expects higher avocado sales volumes but lower average selling prices and per unit profit, resulting in lower adjusted EBITDA.