CVGW value investors are getting shafted by the AVO merger announced today

CVGW and AVO sell avocados. In June CVGW was trading just under 28 dollars and represented a strong long term value investment. Debt was low and EBITDA was strong and their prepared segment (guacamole) was growing at brisk rates. On Jun 25, 2025 CVGW receives an "anonymous" (it was AVO) bid for 32 dollars a share. At this time avocados are selling for about 1.82 a pound. AVO then starts a series of suspicious and very aggressive price cuts in the next six months. It is true that their harvests in Peru helped supply and demand....but volume only increased by 13-15% by Q4 while AVO cuts prices by at least 27%. AVO was able to do this because they mostly own their fields in Peru and the main harvest is in Summer/Fall...while CVGW pays farmers in Mexico for their avocados and their main harvest is Spring/Winter. AVO has impressive summer/fall pricing power. Despite the good crop from Peru they didn't need to cut prices so much. In Dec 18th and a month later, John Pawlowski, CEO-designate hints at what they were doing: >"In North America, there's meaningful opportunity both in growing overall avocado consumption and ***in taking share from competitors***... We are well positioned to lead category growth." ... "The glide path you saw in '24 and '25 is consistent with the glide path that we’re pushing and pursuing in '26... This is the **same playbook we employed with avocados**; we’re moving into mangos and blueberries with that same mindset—building the infrastructure, securing the supply, and **taking share from competitors year after year**." Translation...they temporarily plunge commodity fruit prices to kill the competition. And this time CVGW was in their cross hairs while coincidentally their conditional offer was at play (huge conflict of interest). CVGW has to tank their avocado prices to compete with AVO's price blitz. But CVGW is much smaller than AVO and because they don't own the avocado farms they get hurt more by this suspicious price war. On top of this they have a 4 week lag between getting payment from their customers like Trader Joes and Walmart, before they reimburse sellers. Falling prices really hurt CVGW. But CVGW was still profitable and their prepared foods segments was doing great. Fast forward to today and it was announced that AVO had offered CVGW 27 dollars a share...down from 7 months earlier when it was 32 dollars. Yes CVGW's stock had tanked from 28 dollars to 18...then rebounded somewhat to 22. But even their in the post-price war context that AVO created, their EBITDA and projections justified a significantly higher valuation. CVGW's Cole could have fought higher for a higher take-over price...but he coincidentally accepted a special merger retirement provision ("change of control") that would immediately vest if the merger went through. In essence he was bribed to accept their lowball offer. It is likely shareholders will approve this, because most are institutions and they don't care about issues like this...especially when CVGW is a smallcap. They just want quick short term gains. But...it is very possible the FTC blocks this. The 2023 Merger Guidelines say mergers that result in 30% or more market share are illegal monopolies...and the new AVO would have up to 45% market share for avocados in the USA. By the rule of law, this merger should be rejected...but I suspect it will somehow get rubber stamped. After the merger completes (or maybe at least after the FTC finishes their review), coincidence of coincidences....avocado prices will shoot up sharply (regardless of farm yields) and CVGW's assets (now under AVO's control) will significantly outperform their merger premium. AVO then will move onto new targets to monopolize like blueberries and mangos as their CEO explained. It's sad that value investors who bought CVGW long term at 28 dollars a share this summer, will now be forced to sell at a loss to satisfy AVO's greed.