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Turners & Growers [NZX: TUR], the fruit marketer controlled by Germany's BayWa, has agreed to buy Hawke's Bay-based Apollo Apples for as much as $44.1 million as it looks to meet growing global demand.
The Auckland-based company will pay $36.05 million up front for the apple grower, packer and exporter, and cool store operator, and will pay up to $8 million in the following four years if performance targets are met, T&G said in a statement. Apollo founders Bruce and Ross Beaton will stay with the business for at least the next four years.
T&G also agreed to pay $1 million for a half-stake in Apollo Foods, a small processed apple foods business, with the Beatons keeping the other half.
The deal is part of T&G's growth strategy to help its ENZA unit meet global demand for southern hemisphere supply, it said.
"The acquisition demonstrates our commitment to further invest in the NZ apple industry, improve grower returns and increase NZ apple exports," T&G chief executive Alastair Hulbert said. "We need to serve the demand of a greater number of export customers and markets."
T&G returned to profit in 2013 after two years of losses when it wrote down the value of its orchards, with higher volumes, price increases, greater access to new markets and customers in Asia helping to boost its export earnings.
The deal is subject to Overseas Investment Office approval and certain material contracts, which T&G said will likely be satisfied within four months.
T&G's shares, of which BayWa owns about 73 percent, were unchanged at $1.90 yesterday, and have gained 8.6 percent this year.