Is Alico Really Buying Florida Land For Future Profit, And Not Citrus Trees?

[Millet]

NEW YORK (December 3, 2014) Wall Street Journal – Alico  Inc. said it is acquiring three Florida citrus producers, making the U.S. agribusiness one of the country’s largest suppliers of oranges.
 
Alico said it is paying about $363 million for orange producers that will boost the company’s production to 10 million boxes of oranges a year, close to 10% of Florida’s annual output.
 
The deals, which include almost 28,000 acres of land, come at a difficult time for the citrus industry in Florida, the top supplier of U.S. oranges and orange juice. A bacterial disease—citrus greening—has devastated production and driven up prices of oranges, hurting demand for orange juice. U.S. sales for the once ubiquitous breakfast beverage fell to the lowest level in at least 16 years in the season that ended in September, according to Nielsen data.
 
The largest acquisition is of Orange-Co LP, which includes 20,263 acres. Alico will pay $274 million for the company, financing the deal with debt and a $97 million sale of its sugar-cane assets. Alico grows citrus and sugar cane, raises cattle, and manages land in Florida.

[Blake Branch]

Everything that I've read says that they are planning on keeping the newly acquired groves in citrus.  The groves that they purchased were fairly clean, as far as HLB is concerned, and will increase their production to 10 million pounds per year.  Hopefully this type of acquisition can bring more stability in the juice market than what is has been for the past couple of years.

The current CEO wants to keep the business moving forward in the citrus industry, just like Ben Hill Griffin Jr. was doing with it when Alico got into the citrus business back in the 1960's. 

My only concern is that the majority shares of Alico stock were sold by Griffin Jr's heirs to investors from New York last year. If the farms do begin to decline from greening, the majority stockholders may want to sell the land as residential real estate, instead of replanting the groves. 

[Millet]

With Alico Inc. acquiring the three Florida citrus operations will result in Alico becoming the single biggest citrus producer in the United States. The transactions, totaling about $363 million, involve purchasing nearly 28,000 acres of land, and comes at a crucial time for the citrus industry in Florida. Investors loved the acquisition, pushing Alico's stock price up 14 percent. The properties Alico is acquiring are said to be very well-managed properties, doing all they can to fight greening. - Millet

[Millet]

Alico's acquisition is "transformative" for the 54-year-old company, an endorsement apparently echoed by Wall Street. Shares in Alico surged 18 percent in early trading Wednesday before closing at $40.90, up $5.06 or 14.13 percent. Oranges are so intertwined with Florida's identity that the fruit is emblazoned on state license plates. In 1967, the Legislature named orange juice the official state beverage. The orange blossom is the official state flower. The orange is the official state fruit. There is a Citrus County and an Orange County. The football stadium at the University of Florida is even named for Alico's former CEO, citrus baron Ben Hill Griffin Jr., who died in 1990. - Millet