Leading Australian grower-packer-marketer Mgroup is looking for a new CEO after Jeff Jackson resigned last week.
The shock development comes little more than a year after Hong Kong-based conglomerate Chevalier International Holdings acquired a controlling stake in the company in a transaction worth US$219m.
While Jackson, Mgroup management and Chevalier officials could not be reached for comment, Asiafruit understands the Mgroup board decided that after a year of difficult trading conditions and results that fell below expectations, a change in senior management was the best path forward.
That decision comes as a surprise given that Jackson was a key figure in steering Chevalier’s strategic investment in the Australian company (formerly known as Moraitis) – and its future growth plans.
Jackson spearheaded an Mgroup management team who acquired 8 per cent of the company as part of the same transaction.
An entity controlled by Chevalier and the Mgroup management team now owns 70 per cent of the business, with the remainder of the shares held by existing equity partner Catalyst Investment Managers and the Moraitis family.
Since the transaction went through last April, the Mgroup management team has run the business independently with the investment from Chevalier as majority shareholder, while the Moraitis family have effectively relinquished control.
Family patriarch Nick Moraitis founded the company 55 years ago, and since then it has evolved from a Sydney-based potato merchant to become a leading supplier of a range of produce to the Australian retail market with interests in farming, production, processing and packing through joint ventures and alliances.
Jackson joined Moraitis as chief operating officer in 2007, just under a year after the Moraitis family had sold a 49 per cent shareholding in the business to private equity partner Catalyst. He took over as CEO in 2008, and the group’s annual revenues doubled over the next five years, reaching A$490m in the year ending 27 June.
Mgroup operates a 'grower-aggregator' model, which focuses on managing product from farm-to-retail, and offering value-added services via its know-how and packing infrastructure. However, a move towards direct farm sourcing among Australia’s major retailers has put pressure on this model in the past year or two, while trading conditions in some of Mgroup’s key categories, particularly potatoes, onions and pumpkin, have been very tough.
In a Stock Exchange announcement following its buyout last year, Chevalier said it planned to boost Moraitis’ market share and product penetration in Australia, and to explore opportunities for export of Australian produce to mainland China.
In the longer term, it said it would seek to use Moraitis (Mgroup) as a platform to provide investment, farm management and distribution services for investors seeking agriculture opportunities in Australia. It also announced plans to replicate Mgroup’s ‘grower-aggregator’ business model and skills in farm management and retail supply chains to expand in China’s fresh produce industry.
Jackson was seen as a key figure in executing these plans and the longer-term vision. Only last month, he set up a new Australasian import/export joint venture for Mgroup – The Fresh Connection South Pacific – together with leading US-based global exporter The Fresh Connection.
The Mgroup board’s decision appears to have been driven by an immediate focus on turning around the company’s results on the domestic market, but finding a successor to Jackson who can rise to that challenge as well as implementing the longer-term expansion plans will not be easy.
