Cobram Estate’s $173.5M Acquisition to Boost EPS by 9% in FY27
Cobram Estate Olives Limited has agreed to acquire California Olive Ranch, a leading US extra virgin olive oil producer, for US$173.5 million, significantly boosting its US footprint and expected to add 9% EPS accretion by FY27. The deal positions Cobram Estate as a major player in the fast-growing American EVOO market.
- Acquisition of California Olive Ranch for US$173.5 million
- Expected 9% EPS accretion in FY27, first full year post-acquisition
- Synergies forecasted at US$12 million in FY27, rising above US$20 million by FY30
- Expands Californian olive grove footprint to over 4,300 hectares
- Deal funded via cash, vendor notes, and debt with completion expected by February 2026
Strategic Acquisition in the US Olive Oil Market
Cobram Estate Olives Limited (CBO), a prominent Australian olive oil producer, has entered into a binding agreement to acquire California Olive Ranch, Inc. (COR) for a total consideration of US$173.5 million. This acquisition marks a significant step in CBO’s strategy to expand its presence in the rapidly growing US extra virgin olive oil (EVOO) market, which has seen consumption growth outpacing other cooking oils.
California Olive Ranch is a vertically integrated business with a strong brand portfolio, including the #1 selling Californian EVOO brand and the super premium Lucini® Italia brand. The company operates approximately 4,370 hectares of olive groves, combining owned, leased, and third-party contracted groves, and boasts a state-of-the-art milling and bottling facility in Northern California.
Financial and Operational Impact
The acquisition is expected to be approximately 9% accretive to CBO’s earnings per share in the first full year of ownership (FY27). Synergies from the deal are forecasted to deliver US$12 million in cost savings and operational efficiencies in FY27, growing to over US$20 million annually by FY30. These synergies include improved olive oil yields through CBO’s proprietary Oliv.iQ® system, reduced grove costs, and enhanced corporate and operational efficiencies.
Funding for the transaction will be a mix of cash, vendor notes totaling US$70 million, and additional debt provided by the Commonwealth Bank of Australia. The vendor notes carry an 8.0% to 8.8% interest rate with a five-year term and include warrants tied to CBO’s equity value, offering potential upside for noteholders.
Market Position and Growth Prospects
With this acquisition, CBO significantly expands its Californian olive grove footprint from around 1,422 hectares to over 3,200 hectares of owned and leased groves, plus more than 4,600 hectares of third-party groves. This scale positions CBO as one of the leading producers and marketers of premium Californian EVOO in the US, a market that has grown at a compound annual growth rate of 4.5% since 1990 and is now the world’s second-largest olive oil market.
The combined brand portfolio of Cobram Estate, California Olive Ranch, and Lucini Italia is forecast to generate approximately US$150 million in net revenue in FY26, with a strong presence in over 30,000 US stores. The acquisition also offers opportunities to expand Cobram Estate’s branded sales in the US and to leverage COR’s established distribution network and customer relationships.
Business Update and Outlook
Alongside the acquisition announcement, CBO reported a 27% increase in olive oil supply secured for FY26, totaling 3.8 million litres, supported by ongoing grove development in California. The company highlighted that only 15% of its US groves are currently mature, indicating significant growth potential as new plantings come into production.
While first-half FY26 packaged goods sales are expected to be broadly in line with the previous year’s record results, operating cash flows are anticipated to be lower due to increased spot oil purchases and higher water prices in Australia. CBO remains confident in the long-term value proposition of its flagship Cobram Estate brand, which continues to grow despite market normalization.
Bottom Line?
Cobram Estate’s acquisition of California Olive Ranch sets the stage for accelerated US market leadership, but integration execution and regulatory approvals will be key to unlocking full value.
Questions in the middle?
- How will CBO manage integration risks and realize the forecasted synergies post-acquisition?
- What impact will the vendor notes and warrant structure have on CBO’s future capital structure and shareholder dilution?
- How will competitive dynamics in the US EVOO market evolve with CBO’s expanded presence?
