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Seeka Kiwifruit to buy Glassfields at EBITDA x5

Staff writer |
Seeka Kiwifruit Industries has agreed to purchase Glassfields (NZ). The transaction is expected to be completed on April 17, 2014.

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Glassfields, with operations based in Auckland and opening in Christchurch, provides ripening and delivery services to key retail customers as well as wholesale market services to independent operators.

The company holds exclusive New Zealand rights to import and distribute Sumifru bananas, pineapples and papayas from the Philippines and provides banana ripening services for an extensive part of its business operations. Prior to purchase the company was privately owned.

Seeka advises that the purchase will be made using a combination of existing cash resources and debt lines. Seeka would expect an EBITDA impact of between $750k and $1.25m in the 2015 financial year from the purchase without including growth from a number of initiatives that Seeka is considering.

The price represents an EBITDA multiple of approximately 5 times on normalised earnings. The EBITDA impact in the current financial year is expected to be less as the company is repositioned into the Seeka group, and taking into account costs of the acquisition. All employees of Glassfields are expected to be retained in the acquisition.

Glassfields will be led by a new General Manager to the company, Mr Ray Hook. Ray brings a wealth of experience to Glassfields having worked as the Joint Chief Executive of One Harvest and Chief Executive of Oolloo Farms and The Harvest Company in Australia, and prior to that Chief Financial Officer at Summit Quinphos and the Stevenson Group.

Seeka's Chief Executive, Michael Franks, said: "Glassfields is a small but important step in Seeka achieving its strategic goal of becoming New Zealand's Premier Produce Company. Kiwifruit remains the foundation of Seeka's business, but importantly new produce and income streams are being added as part of our growth strategy. Avocados and Kiwiberry have successfully been added already, along with a Malaysia hub coolstore investment.

The Glassfields acquisition sees Seeka entering the retail services sector in New Zealand and adds the banana category to the Company's product range. Seeka will continue to build on its supply chain business that delivers excellent service and produce to its customers."

Seeka has also now completed the sale of its shares in OPAC, for net proceeds of $3.1 million.