Organto Foods has announced that it has entered into a letter of intent (LOI) with a Mexico-based privately owned real estate investment management to form a new food and agricultural joint venture.
The proposed joint venture will be named Organto Mexico which will acquire, develop, own, manage or invest in food and agriculture assets or entities.
The joint venture will acquire the companies which produce, directly or indirectly, organic fruits and vegetables throughout Mexico, for sale into the US, European, Latin American and Asian markets, including in Mexico.
The move is aimed to developing Organto Mexico into one of the leading food and agriculture companies producing, packaging, marketing and distributing organic and conventional produce that is grown on farmland in Mexico.
Organto president and CEO Peter Gianulis said: "This is a major move toward the development of an operating platform in Mexico, with a strong local partner, in an agricultural market that borders the US, the largest organic market in the world, and is in one of the largest and most important agricultural economies globally."
The LOI is intended to take the discussions on setting up the joint venture to the next stage.
According to terms in the LOI, Organto would own 50% and a private investor would own 50% of the outstanding class A shares of Organto Mexico.
Besides, the joint venture will consider creating pooled investment funds to acquire or rent farmland and/or land reserves in which to produce organic fruits and vegetables across Mexico.
However, the company said that the LOI is non-binding.
The transaction is subject to entering into a definitive agreement between the parties containing terms and conditions yet to be negotiated.
In May, Organto raised $2.45m through a private placement of its shares. The company planned to use the proceeds to advance its build-out of Argentina, expand its existing operations in Guatemala and for general working capital purposes.
