San Miguel, a leading corporation in the production of fresh and processed citrus in the Southern Hemisphere, completed the acquisition of Agrícola Hoja Redonda (AHR) of the Breca Group for US $64 million. With the purchase, Peru becomes the companys second biggest market regarding its installed area.

Industry sources say that foreign investors are very interested in acquiring medium-sized agroindustrial operations, so this operation could be the preamble of a series of acquisitions and trans-nationalization of companies of the sector. 

San Miguel, whose head office is in Argentina (5,400 ha), now owns 1,708 hectares (ha) of AHR in Peru, as well as fields in Uruguay (1,400 ha) and South Africa (1,250 ha). 

Romain Corneille, global CEO of San Miguel said that the Peruvian agriculture began to form part of the companys strategic plans for internationalization in late 2013. "We had several previous processes that did not take us anywher and that had us a little frustrated," he said.

According to Corneille, AHR had always been the asset that interested them the most. "We just didnt see an opportunity to buy it before, because word was that the Brecca group was not selling anything," he said. 

Plans in Peru
San Miguel decided to purchase AHR because of its operations reasonable size, as 1,382 of its hectares were already in production and they also had 326 hectares to be developed. In addition, the company has two locations (in Ica and La Libertad) and its product portfolio included citrus, specifically mandarins.

In that sense, when asked about how they will continue the AHRs ongoing operation, he said that they would aim to enhance the mandarin business by increasing their productivity. 

The groups global commitment is to invest in irrigation technology and variety replacement. In addition, they will bet on improving their use through the marketing channels that the group already has, as it has alliances with 200 buyers in 50 destinations. 

Regarding Hass avocado and the table grapes, two new fruits that the group will start working due to this acquisition, he said they posed different challenges.

Regarding the avocado, he said they would need to improve the ripening technology in destination as the market demands more and more ready-to-eat fruits. "We are going to focus on a good strategic partner so that our avocado is rich enough," he said adding that the marketing system for Hass avocado was similar to that of citrus. 

"Grape is a complete challenge," he acknowledged. "Its a new product. We understand that one of Perus advantages is that one can grow crops in the same area to have production throughout the whole year," he said. 

Corneille stressed that they hadnt had this opportunity until now, so they will seek to make the most of it to transfer what they learn to other areas wher the group is present.

San Miguel is evaluating the possibility of investing in fruit to make oils, juices and shell processing. "In a long-term projection there is an excellent opportunity. We are not looking at short-term returns," said Corneille.

He also didnt it rule out the possibility of the group acquiring new land or seeking to absorb other companies. "Both options interest us," he said.

From Merval to BVL 
Grupo San Miguel is part of the Buenos Aires Stock Market Index (Merval), along with the 22 companies with the highest volume of trading in that market. 

Last March the group issued US $46 million fresh funds to boost the groups growth strategy, stated Patricio Aguirre, the groups management and financial director. The group had not carried out a similar operation since 1997, when they began trading on the Buenos Aires Stock Exchange. 

In total, the group plans to invest US $100 million between the next 18 and 24 months, through the capital the make in Merval and through debt. 

Aguirre did not rule out the possibility of raising capital on the Lima Stock Exchange. "Despite being a shallow capital market, it does have more stable macroeconomic conditions," he said, comparing Peru with Argentina and South Africa, and highlighting Perus low country risk. 

"We are going to try to support these capital markets as much as we can in each of the countries," he added.

Sales
In 2016, San Miguel invoiced US $156 million in fresh produce, 52% of which corresponded to lemon, 38% to orange, 10% to mandarin, 1% to grapefruit. 

In processed products, it invoiced US $112 million, 36% of which came from oils and flavorings, 44% from juices, and 20% from dehydrated shells.