Bog Walk orange farms are up for grabs. INTERNATIONAL JUICE giants Del Monte and Tropicana are both early front runners in the race to buy United Estates for an expected price tag of more than $2 billion, after the shock news that the McConnell family had put its almost 5,500 acres of orange farms and plant up for sale.
The news came as a surprise to almost everyone in the industry and investment community, as well as its 1,200 seasonal and permanent staff and other farmers and suppliers in and around the Linstead area.
On Sunday the McConnell family put up for sale the entire assets of United Estates Ltd., Bog Walk, St. Catherine, manufacturers of the popular "Tru Juice" line of orange juice, the largest orange farm and export operation in the Caribbean.
The Sunday Gleaner advertisement said that Price WaterhouseCoopers had been handed the job of selling its citrus concentrate and juice-manufacturing plant, an export packing house, plus a fleet of farm vehicles and a maintenance garage, workers' and senior management houses and a total of 5,422 acres of Bog Walk farmland are up for sale.
One of the most surprising elements of the sale is that it comes after huge investment in plant, processing equipment and the massive replanting done at the farms.
Mr. McConnell estimated yesterday that he had replanted about 50 per cent of the orange crop in recent years as a result of the citrus Tristeza virus.
The cost of replanting can be as much as US$5,000 per acre and it takes four years before the fruit bears, eight in total to produce a fully harvesting tree.
In June he estimated that the virus has already wiped out about 3,000 acres of United Estates citrus. The managing director said the loss in financial terms has been set at $160 million.
The Inter-American Development Bank (IDB) has stepped in to assist the industry with a soft loan of US$60 million to cushion the blow of the Tristeza virus, which caused the loss of hundreds of citrus trees.
United Estates is also the home of local efforts to fight the disease and houses the replanting nursery.
National Workers Union (NWU) president Clive Dobson said yesterday the news had come as a 'surprise". "Nothing can convince me that this move has not been taken as a result of the recent finding by the Industrial Dispute Tribunal (IDT) against the company," according to Mr. Dobson.
United Estates head Mark McConnell denied that the IDT award was a serious factor in the decision. "It's nothing to do with that....This business has a bright future. We just had to look at our capital. No matter what amount of capital you have, you have to see where you can get the best advantage."
He declined to comment on suggestions that Del Monte and Tropicana were keen to buy the company but confirmed that interest had been expressed even before the November 16 deadline set for submissions of formal expressions of interest.
The news that the powerful family was selling a prime farming asset has immediately led to speculation that other land and property holdings owned by the family may also be on the chopping block.
A sceptical Senator Peter McConnell, who made a scathing attack last week on the IDT, said yesterday that there were no plans at present to sell its sugar operation at Worthy Park. He said: "How would we liquidate, who would buy it? We are so committed to sugar but it doesn't have as bright a future as citrus.
He said: "The whole thing is very depressing here. I'd love to see something happening here but things are becoming too horrendous".
On Monday The Gleaner reported that David McConnell, a manager of United Estates, said the sale was a result of the company needing cash to take advantage of another investment opportunity. He declined to divulge details, referring to the matter as a "delicate situation," adding only that the venture was similar, and also in agriculture.
Farming industry sources said it was unlikely that another bidder would emerge locally.
"It's got to be worth at least $2 billion. It's a top quality farm, well, run, making money. Already Del Monte and Tropicana are looking at it," according to one big land owner.
Big agricultural concerns such as the Jamaica Producers Group yesterday counted out making a bid for United Estates. Producers Group boss Dr. Marshall Hall said although David McConnell sits on his board the news had come as a surprise to him also.
In late 1998, United Estates failed in a $150 million bid to buy NCB Group's Jamaica Orange Company, the 3,000 acre farm in Montpelier eventually sold to the Agricultural Credit Bank (ACB) for $250 million.
Its head Kingsley Thomas said on Monday that the McConnell's business was not an option.
United Estates produces over 5 million boxes of citrus a year, with roughly half going overseas in primarily concentrate form.
But the business has had its problems.
In September Mark McConnell, managing director of United Estates, said his overseas markets for citrus and citrus concentrates have been almost wiped out due to the prolonged drought. Mr. McConnell said these markets were in the CARICOM region and in the United States. He said that the loss to the citrus industry has been set at more than US$10 million dollars annually.
United Estates has also suggested that it loses approximately $15 million annually in sales of oranges and orange concentrates supplied to its markets in the United States and CARICOM due to praedial larceny.
