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August 22, 2011

Argentine company to acquire South African citrus farm

Argentina’s largest lemon producer San Miguel has signed a ZAR100 million (US$13.8 million) agreement to buy a South African citrus farm in the Eastern Cape region.

In a statement released on the Buenos Aires Stock Exchange, the company said the ‘Riverbend’ farm in the Sundays River Valley has a production potential one million cartons annually, and would be purchased through affiliate San Miguel Fruits South Africa (Pty) Ltd

“The ‘Riverbend’ farm has a surface area of 2,682 hectares of land distributed in several plots, of which 330 are planted with citrus with an average age of nine years and a production potential of one million export boxes,” said chief financial officer Alejandro Daireaux.

“The Agreement also includes water rights for 380 hectares which would allow for the development of a net area of 600 hectares of citrus, to double the volume up to two million export boxes.

“The acquired land includes 1.951 hectares currently used as a game farm. The Board intends to sell the game farm during the next two years, approximately.”

The acquisition agreement also includes machinery and improvements, along with the harvest crop as of Aug. 1 this year, which will be harvested in October. With this year’s crop value estimated at ZAR10 million (US$1.38 million), the net price of the assets is calculated as ZAR90 million (US$12.42 million).

The deal still awaits final approval from the seller’s board of directors, which is expected to take place on Sep. 1.

“The Closing of the deal is estimated for late October or early November, when all assets will be transferred to San Miguel against payment of the price.”

Daireaux said the deal was part of San Miguel’s strategy to become a leading citrus business player in the Southern Hemisphere, following on from previous investments in South Africa made in 2008.

He said the company would develop productive, logistic, organizational and business know-how in South Africa, wit the aim to provide customers an extended citrus product mix.

“All these will strengthen San Miguel´s leadership as a citrus player within the Southern Hemisphere, with volume, quality and varieties that the market demands.”

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