Scales Corporation has finalized an agreement to divest two of its apple orchards in Hawke's Bay, New Zealand, to a fund managed by Craigmore Sustainables, composed of international investors, for a total of $34 million, pending approval from the Overseas Investment Office. The deal encompasses the Te Papa and Blyth orchards, which together account for 186 hectares of productive land. The orchards are believed to cultivate Fuji and Royal Gala apples, which will continue to be supplied to Scales' subsidiary, Mr Apple, for packing and marketing purposes.
As part of the transition strategy, the Blyth orchard will be leased back to Mr Apple until the conclusion of the 2027 growing season. Moreover, Mr Apple will extend short-term management services to the Te Papa orchard.
Andy Borland, Managing Director of Scales, noted that this transaction is expected to result in a $4 million reduction in earnings. However, he highlighted that the acquisition of Bostock orchards earlier in May is anticipated to offset this impact by contributing an additional $10-$12 million in earnings over the medium term. This acquisition increased Scales' portfolio of premium apple varieties, including Dazzle, Posy, and Pink Lady. Despite the challenges posed by Cyclone Gabrielle in 2023, Mr Apple achieved earnings of $15 million, a decrease from the $40-$50 million range observed in previous years.
Source: farmersweekly.co.nz