Mergers & Acquisitions

Local Bounti® To Acquire Pete’s® For $122.5 Million

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Local Bounti® this morning announced plans to acquire, California-based Hollandia Produce Group, Inc (Also known as Pete’s®) for USD 122.5 million through cash and their lending facility with Cargill. In the meantime, the company has announced that they have increased sales by 678% in 2021 but increased their EBITDA loss.


Local Bounti Corporation (NYSE: LOCL, LOCL WS) today announced that it has entered into a definitive agreement to acquire California-based complementary indoor farming company Hollandia Produce Group, Inc., which operates under the name Pete’s®, for total consideration of $122.5 million, subject to customary adjustments (the “Transaction”). The Transaction consideration will be comprised of $92.5 million in cash, expected to be provided pursuant to Local Bounti’s existing lending facility with Cargill, and the remaining $30.0 million of consideration payable in shares of Local Bounti common stock as per their recent press release.


Pete’s is a California-based indoor farming company with three greenhouse growing facilities, including two operating facilities in California and one under construction in Georgia which is scheduled to begin operations in the second quarter of 2022. Pete’s has distribution to approximately 10,000 retail locations across 35 U.S. states and Canadian provinces, primarily through direct relationships with blue-chip retail customers, including Albertsons, Kroger, Target, Walmart, as well as Whole Foods and AmazonFresh. Pete’s primary products include living butter lettuce – where it is a leading provider with an approximate 80 percent share of the CEA market within the Western U.S. – as well as packaged salad and cress. Pete’s has been in operation for over 50 years while focusing the last 25 years in leafy greens, has long-standing relationships with the majority of its customers, and has a demonstrated track record of generating positive EBITDA.


Local Bounti plans to install its patent-pending Stack & Flow Technology at Pete’s three facilities, combining the best aspects of vertical farming and greenhouse growing technologies to deliver higher yields of diverse leafy greens at superior unit economics. The Transaction also allows Local Bounti to gain access to Pete’s existing retail customer base of more than 10,000 retail locations nationwide.


“This synergistic acquisition is a unique opportunity to combine a highly-complementary and profitable CEA market leader in Pete’s with Local Bounti’s technological solutions to significantly accelerate market access for our superior produce varieties and create one of the largest CEA companies in the United States,” said Craig Hurlbert, Co-CEO of Local Bounti. “Our best-in-class unit economics at Local Bounti are enabled by our efficient and cost-effective system. The acquisition of Pete’s allows us to de-risk our operational execution in the near term with their proven model while offering significant synergies to ramp their production with a retrofit of our Stack & Flow Technology. We are thrilled to leverage our combined strengths through this transaction, which brings significant opportunity to drive yield enhancements to service a growing blue-chip retail customer base. This Transaction provides an instant scale that creates immense value for our employees, customers, partners and shareholders alike and we couldn’t be more excited about what lies ahead.”


“For 50 years we have been obsessed with offering high-quality products and great service while focusing on innovation and sustainability within the indoor farming space. By combining with Local Bounti, we scale our business and partner with a leader that shares in our philosophy,” said Brian Cook, CEO of Pete’s.


Strategic and Financial Highlights

  • Creates a leading, scaled CEA operator with national distribution footprint and access to approximately 10,000 retail doors – The combined company will service a CEA industry-leading retail customer door count with two brands and private label offerings. Local Bounti expects to leverage Pete’s existing customer base to sell Local Bounti’s products in the Northwest U.S. It further builds and expands upon Pete’s deep relationships with blue-chip retail customers such as Albertsons, Kroger, Target, Walmart, as well as Whole Foods and AmazonFresh.
  • Local Bounti to add significant geographical reach with three additional facilities – Pete’s brings two operating facilities in California (Carpinteria and Oxnard) and a new third facility under construction in Georgia, which is expected to begin operations in second-quarter 2022.
  • Robust opportunities for operational synergies that are expected to drive growth and operating margin expansion – Integration of Local Bounti’s proprietary Stack & Flow TechnologyTM into Pete’s existing growing systems is expected to improve organic revenue growth through enhanced crop turns and yields, while the Company also expects to realize significant supply chain-related benefits associated with greater purchasing scale – estimated to result in approximately 10% saving on Local Bounti’s existing cost of goods sold from raw materials and packaging in the first full year of operation – both of which are anticipated to drive a positive resultant impact on margin rates in future periods. Further, Local Bounti’s differentiated retrofit capabilities to existing operations also expand the addressable market while driving returns on invested capital.
  • Financial model driven by a focus on capital efficiency – Local Bounti and Pete’s share an operating philosophy geared toward maximizing capital efficiency, whereby capital allocation decisions are focused on driving revenue-generating activities and generating greater returns on invested capital.
  • Immediately accretive transaction – Pete’s has a strong financial track record, generating an estimated $22.7 million of revenue in 2021, historical gross margins of greater than 45% over the past five years, and positive EBITDA from its two operational farms in California. After completing their Georgia facility in the second quarter, Pete’s expects to achieve initial run-rate revenue of at least $30 million at full production, excluding the expected future positive impact from additional capacity due to incorporating Local Bounti’s Stack and Flow TechnologyTM at all three of Pete’s farms.
  • Additional Transaction Details and Financing The definitive agreements to acquire Pete’s contemplate an acquisition price of $122.5 million, subject to customary adjustments, comprised of $92.5 million in cash, expected to be provided pursuant to Local Bounti’s existing lending facility with Cargill, and the balance to be paid in $30.0 million in equity comprised of shares of Local Bounti common stock.

It is anticipated that all of Pete’s 130 employees will join Local Bounti for a combined total headcount of 250 employees. Pete’s management team is expected to remain in place as the company becomes a wholly-owned subsidiary of Local Bounti.


The Transaction is subject to customary closing conditions and a condition that the purchase of certain real estate owned by Pete’s is completed. A Notification and Report under the Hart Scott Rodino Act was filed on January 18, 2022, and the waiting period expired on February 17, 2022. The Transaction is expected to close the early second quarter of 2022.


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