Company Report

Equity Research

October 20th, 2021 | 2 pages

Hortifrut
The company strengthens its presence in Europe across the
value chain.
 Banchile’s take – We are positive about the latest inorganic growth initiative
carried out by Hortifrut (HF) announced the day before yesterday. The company Recommendation BUY
acquired a vertically integrated berries producer (mostly blueberries) named Atlantic
Blue (AB) for an EV of EUR241 million (~US$280 million). AB is involved in variety Target Price (ChP / share) 1,540
development, growing and sales of berries in Europe and North Africa. The deal will
increase HF´s growing area by ~20% (on an ownership-adjusted basis). In addition, Current Price (ChP / share) 835.47
HF will take 100% control of the Euroberry trading platform, in which currently
owns 50% stake. The latter reaches annual sales exceeding of ~EUR200 million Market Cap (US$ billion) 0.59
(~US$230 million). All-in, the deal will allow HF to supply the European market
with blueberries year-round through a fully-controlled commercialization platform Min-Max Price 12M (ChP) 720-1,360
and a breeding development program which offers room for a more active
deployment in the market.
 Additional details about Atlantic Blue – AB owns fields in Spain (400 has),
Morocco (248 has), and Peru (400 has through a 50% stake in a JV with HF),
Stock Price Performance
totaling 1,048 productive hectares. This means additional 850 has for Hortifrut on
an ownership-adjusted basis (+19% on consolidated terms). The transaction also
considers a process plant located in Spain. The deal includes the berries and cherry 120
genetic program of AB, that is, high quality fresh blueberries as well as selection of 100
cherries with low cold requirements. 80
60
 How will HF pay the price? – As usual, the closing of the transaction is subject
to the accomplishment of certain conditions. If the latter are finally met, the closure 40
is planned for November 30, 2021. Following the due diligence, the price of 20
EUR241 million may suffer some adjustments. Subject to the latter, the price will be 0
paid as follows: (i) EUR24 already disbursed by the end of last September (10% of
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total); (ii) EUR72.3 million, or 30%, at closing (November 30, 2021); and, (iii) the
remaining in 10 equal annual installments since closing (60% of total).
 Implied Valuation – We estimate that the entities acquired through this deal Source: Bloomberg, Banchile Research.
generate an EBITDA of EUR28-29 million/year. Thus, HF would have acquired AB at
an implied EV/EBITDA of ~8.5x. The latter is well above the market multiples of
Hortifrut’s stock (LTM EV/EBITDA ~5,7x; historical low), yet lower than its closest
peers' valuations. Rodrigo Godoy
rodrigo.godoy@banchile.cl
 What we believe about such implied valuation – Unlike the acquisition of +56 2 28736114
Rocio Group’s growing operations in Peru at an estimated 6.2x EV/EBITDA
(completed in 2018), the purchase of Atlantic Blue will also allow HF to control a Gonzalo Alvear
commercial platform and continue to expand in genetics. These last two businesses gonzalo.alvear@banchile.cl
should help to provide not only a more predictable and recurring source of income,
but also leverage the company to the expected growth of blueberry consumption in
Europe. Based on our preliminary estimates about the relevance of the growing and
commercialization businesses for Atlantic Blue and given the fact that the fields are
not mature yet, the EV/EBITDA paid by Hortifrut seems very reasonable, in our view.

See Important Disclosures in the final page of this report 1

 Company Report
Equity Research

October 20th, 2021 | 2 pages

Important Disclosures
a) The Research Department is independent of the Investment Banking Division of Banco de Chile and of Banchile Inversiones
Asesorías Financieras, as it is similarly with any area of business within Banchile and Banco de Chile. The latter implies that
the Research Department is neither subordinate nor dependent on the aforementioned areas and as such its opinions are not
influenced by other areas within Banco de Chile or Banchile Inversiones.
b) As of October 20th, 2021, before market opening, Banchile Corredores de Bolsa possess a position in the shares of Hortifrut
within its own portfolio, equivalent to 0.01% of Hortifrut shares outstanding. That position could have, totally o partially, the
character of trading and/or medium or long term investment. In addition, the stock-broker can not buy or sell securities of this
company for the portfolio of Banchile until 24 hours after the study is emitted, with exception that Banchile acts as Market
Maker at the specific request of customers of the stock-broker.
c) Banchile Corredores de Bolsa is able to buy and sell and to maintain long or short positions in the financial instruments
mentioned in this report that could be contrary to the recommendation(s) contained here. In addition, during the last 12
months, the Investment Banking Division of Banco de Chile has not been contracted by Hortifrut.
d) The analysts responsible for the preparation and drafting of this document certify that the contents of this study accurately
reflect their personal views about the firm(s) mentioned. The analysts also certify that no part of their compensation was, is, or
will be directly or indirectly related to a specific recommendation, or views expressed in any study, or to the results of Banchile
Corredores de Bolsa’s own portfolio management, or to activities conducted by the Investment Banking Division of Banco de
Chile. Moreover, these two areas of the company (and Proprietary Trading and the Investment Banking Division of Banco de
Chile) do not evaluate the performance of the Research Department.
e) The analysts of the Research Department of Banchile Corredores de Bolsa are not able to acquire shares or debt instruments
issued by Chilean companies that are under their coverage of analysis. Meanwhile, the Head of the Research Department of
Banchile Corredores de Bolsa is not able to acquire shares or debt instruments emitted by Chilean companies that are listed in
the stock market.
f) The instructive nature of so-called “Normas para Transacciones de Valores y de Moneda Extranjera de los Empleados de
Banchile” ("Standards for Securities and Foreign Currency Transactions of Banchile Employees") aims to regulate all securities
and foreign currency transactions made by an "Employee of Banchile" so as to avoid conflicts of interest. In particular, in
respect to transactions in stocks, as well as among other instruments, an “Employee of Banchile" can not sell securities within
a period of less than 30 days from the date at which they were acquired. In addition, the entire order to buy/sale shares or
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investment alternatives. One should understand that the vision given in this report should not be the sole basis for making an
appropriate investment decision and every investor should do his/her own assessment of their risk tolerance, investment
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i) Although the background on which this report has been prepared comes from sources which we believe reliable, we can not
guarantee that they are accurate or complete.
j) Any expression, opinion, estimate and/or advice contained in this report constitute our opinion or view at its date of
publication and may change without notice. The frequency of reports, if any, is at the discretion of the Research Department
of Banchile Corredores de Bolsa.
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See Important Disclosures in the final page of this report 2