Canadian cannabis producer Village Farms International is spinning off its fresh produce unit, which generated $169m in sales in 2024.
The Nasdaq-listed company will transfer the fresh produce business to newly established holding company Vanguard Food, which is backed by private investment firms such as Sweat Equities.
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In a statement issued yesterday (12 May), Village Farms said it will privatise “certain assets and operations” of its fresh produce division through a joint venture with Vanguard Food.
The consideration for the transaction includes 37.9% of Vanguard’s initial equity along with $40m in cash.
In a statement, Village Farms said the deal will allow it to “focus on its growing international business” while “repositioning its fresh produce business to flourish independently with new strategic capital partners”.
Village Farms CEO Michael DeGiglio expects the deal to “unlock tremendous long-term value” for both businesses.
The agreement involves the privatisation of Village Farms’ Texas-based, 40-acre Marfa II and 40-acre Fort Davis greenhouse assets.
It also includes all produce-related intellectual property, except for the Village Farms name, and the transfer of all produce distribution facilities, employees, and operational control to Vanguard.
Charlie Sweat, Sweat Equities founder and former CEO of Earthbound Farm, has been named chairman of Vanguard’s board, with DeGiglio to join the new joint venture as interim CEO.
According to Sweat, “the industry and macro-economic environments are ripe to begin executing a strategy to drive accretive growth through M&A”.
“The timing of this joint venture aligns perfectly with shifting consumer behaviors, and we’re positioned well to meet increased demand for healthier alternatives to processed foods,” he added.
The fresh produce unit, which offers tomatoes, cucumbers and peppers, contributed $169.2m to Village Farms’ net sales of $336.2m in 2024.
The unit reported an operating loss of $5.9m, an improvement from $7m in 2023.
Net losses also narrowed from $11.2m in 2023 to $5.9m in 2024.
The transaction will be completed through a series of asset and lease transfers to Vanguard, expected to close during the second quarter of 2025, following the satisfaction of closing conditions.
Looking ahead, Village Farms said Vanguard “will seek to expand its product categories and offerings for customers through M&A”.
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