Citing a quartet of unnamed sources, Reuters news service reported Monday, May 6, that Earthbound Farm has hired Barclays bank to entertain offers for the firm. No Earthbound Farm official responded to an inquiry from The Produce News seeking confirmation of the report.
Earthbound Farm, which is headquartered in San Juan Bautista, CA, is the largest shipper of organic produce in the United States with annual sales topping $460 million, according to Moody's, a credit and earnings reporting service. The news report also said that the company had "roughly $75 million annual earnings before interest, taxes, depreciation and amortization."
The sale price of any firm is typically around seven to 10 times the annual earnings based on the industry and the business type. The news report speculated that an organic food operation might trade at a higher multiple, following the lead of Bolthouse Farms, which was sold to Campbell Soup Co. last year for 11 times its annual earnings.
According to the news report, sale discussions are still in a very early stage. It noted that Earthbound Farm's investors also include at least one private equity firm. The Reuters story speculates that the sale price could be in the $600 million to $700 million range.
Earthbound Farm was founded more than 25 years ago by Drew and Myra Goodman, who began their business on a small raspberry farm and soon grew to producing many different vegetable products, all grown organically.
Today the firm is considered the largest organic produce grower and shipper in the United States and is a d/b/a of Natural Selection Foods. Natural Selection Foods was formed in 1995 when the Goodmans partnered with Mission Ranches.
In 1999, Tanimura & Antle, another longtime family-run farming company in the Salinas Valley area, became a one-third partner in the company.