Posted on: Wednesday, October 6, 2004

Mac nut company calls off merger

Advertiser Staff

Mauna Loa Macadamia Nut Corp., the state's largest processor of macadamia nuts, has given up its plans to buy competitor MacFarms of Hawai'i at the same time that a lawsuit challenging the acquisition has been dropped.

Mauna Loa will continue to seek additional sources of mac nuts and is in negotiations for a long-term arrangement with an undisclosed provider, company spokeswoman Cynthia Quinn said yesterday.

Quinn insisted that Mauna Loa's decision to cancel its plans to buy MacFarms was not the result of a lawsuit to block the sale filed last month by competitor Hamakua Macadamia Nut Co. Inc.

"Naturally, the lawsuit went away because we terminated that merger agreement," Quinn said. "It makes the lawsuit go away because there's no basis for it anymore. ... We've found an alternative way to attain the same goal: Find a way to buy more nuts. We'd like to engage in a long-term relationship so we can have a steady stream of Hawai'i nuts."

In July, Mauna Loa Macadamia Nut Holdings Inc. agreed to buy MacFarms for an undisclosed price. Mauna Loa is the Big Island's largest processor of macadamia nuts; MacFarms is the island's second largest buyer and processor.

MacFarms employs more than 50 full-time workers and about 75 seasonal employees, with reported sales of $27 million in 2002, according to the lawsuit. MacFarms, which has its own orchards, supplies about 13 percent of the unprocessed nuts on the island.

In the year ending June 30, Mauna Loa bought 56 percent of the Big Island nut supply while MacFarms bought 20 percent, so between them they bought more than three-quarters of the supply, according to the suit.

Mauna Loa buys unprocessed nuts from growers but does not have its own orchards. However, it controls about 53 percent of the total supply of unprocessed nuts through long-term purchase contracts with growers, the suit said.

The lawsuit alleged that the sale would give Mauna Loa control of 66 percent of the island's nut supply.

Hamakua processes about 6 million pounds of wet nuts a year, or about 10 percent of the unprocessed nuts on the Big Island, according to the lawsuit.