M&A in Indoor Ag: Local Bounti Buys Pete's for $122.5 Million

Hamilton, Mont.-based indoor farming company Local Bounti said it has entered into an agreement to buy another greenhouse grower, Hollandia Produce Group, doing business as Pete's, in a move to expand Local Bounti's retail presence.

The $122.5 million deal to buy Pete's consists of $92.5 million in cash and $30 million in shares of Local Bounti common stock, according to a Local Bounti news release. California-based Pete's, founded in 1970, operates two greenhouse growing facilities in California and has one under construction in Georgia that is expected to begin operations in the second quarter of 2022. 

Pete's has retail distribution in more than 10,000 stores in 35 states and Canada, according to the release, including Albertsons, Kroger, Target, Walmart, as well as Whole Foods and AmazonFresh locations. The company generated $22.7 million in revenue in 2021 and has maintained historial gross margins of more than 45% over the past five years, Local Bounti noted. 

The deal "provides 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," said Craig Hurlberg, co-CEO of Local Bounti. The buyer stated that "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."

Subject to customary closing conditions, the deal is expected to be finalized early in the second quarter of 2022.