What Happened?
Shares of fresh produce company Calavo Growers (NASDAQ: CVGW) jumped 12.2% in the afternoon session after the company agreed to be acquired by avocado producer Mission Produce (AVO) in a cash-and-stock deal.
Under the terms, Calavo shareholders were set to receive $27 per share, which consisted of $14.85 in cash and 0.9790 shares of Mission for each Calavo share they held. This price represented a 26% premium to Calavo's 30-day volume-weighted average price, signaling a favorable valuation for shareholders. The companies anticipated the transaction would generate $25 million in yearly cost savings. The acquisition news overshadowed the release of Calavo's fourth-quarter financial results, which had fallen short of analyst expectations. Upon completion of the deal, expected by August 2026, Calavo shareholders were projected to own about 19.7% of the combined entity.
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What Is The Market Telling Us
Calavo’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Calavo and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 17.3% on the news that the company reported weak first-quarter 2025 (fiscal Q2) results, which fell short of Wall Street's estimates across all key metrics, including sales, operating profit, and earnings per share.
Top-line growth benefited from higher average avocado prices, which offset a year-on-year decline in volume. The volume decline was attributed to constrained supply out of Mexico and USDA inspection delays. Looking ahead, management expects volume growth to pick up, driven by new customer wins and expanded programs with existing accounts, as well as continued strength from the California avocado season. Overall, this quarter could have been better.
Calavo is up 16.3% since the beginning of the year, but at $25.36 per share, it is still trading 10% below its 52-week high of $28.18 from April 2025. Investors who bought $1,000 worth of Calavo’s shares 5 years ago would now be looking at an investment worth $346.02.
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