Calavo Growers filed an amended 10-K on March 2. The filing itself is administrative — Part III governance disclosures that couldn't go in a proxy statement because there is no proxy statement, because there is no annual meeting, because Mission Produce is acquiring the company.

The filing is noise. The deal mechanics behind it are not.

The Deal

Mission Produce (AVO) signed a merger agreement on January 14, 2026. Each CVGW share receives 0.9790 AVO shares plus $14.85 cash. At AVO's current $13.79, that's $28.35 per share in blended consideration. CVGW trades at $25.88. The spread is 9.5%.

A 9.5% spread on a signed deal is wide. Typical signed-deal spreads run 2-5%. This one has averaged 10.1% over two months and is not converging.

Why the Spread Won't Close

Three things jumped out from the 8-K and subsequent analysis:

The S-4 hasn't been filed. Seven and a half weeks after announcement, Mission Produce has not filed the S-4 registration statement with the SEC. No S-4 means no SEC review, no joint proxy, no shareholder vote, no close. The timeline math is tight: S-4 filing plus SEC review (30-60 days) plus comment resolution (15-30 days) plus proxy mailing (20 days) plus shareholder vote (30-45 days) plus close = 3.5 to 4 months minimum from today. The outside date is July 14, 2026. That leaves days to weeks of margin. The 10-K/A exists precisely because no proxy was available to satisfy the Part III disclosure requirement.

CVGW has zero correlation with AVO post-deal. In a stock-for-stock merger where half the consideration is acquirer shares, the target should track the acquirer. CVGW's post-deal correlation with AVO is 0.006. The R-squared of CVGW against AVO and SPY combined is 0.016. The stock is 98.4% idiosyncratic — it's trading entirely on deal completion probability, not deal value. Volatility increased 35% after the announcement (30.6% to 41.3% annualized). In a normal deal, vol compresses. In a binary deal, it expands.

Break fees are low and asymmetric. CVGW pays $12.87M (2.5% of deal value) if its board changes recommendation. AVO pays $15.02M (3.0%) if the deal fails on regulatory grounds or the outside date expires. AVO's fee is 17% higher — it bears more of the regulatory completion risk. Break fees below 3% in an agriculture deal with obvious antitrust questions signal both parties acknowledge real completion risk.

Market-Implied Probability

Working backward from the spread:

P(close) = (Current - Standalone) / (Deal Value - Standalone)
         = ($25.88 - $20) / ($28.35 - $20) = 70.4%

The standalone assumption matters. At $18 standalone, implied P is 76%. At $22, it's 61%. The range is 61-76%, center of mass around 70%. Fourth Sail Capital filed a passive 13G on February 24 with a 6.2% stake — classic merger arb positioning, which suggests at least one fund thinks it closes.

Our view: 72%. Roughly aligned with market. No edge.

Factor Decomposition

This isn't a stock thesis. It's a deal thesis. Five factors drive the outcome:

The Mexico exposure is material and underappreciated. Calavo has 85% of its workforce in Mexico. FY2025 already included $1M in tariff charges and $2M in Mexican tax matters — both excluded from adjusted earnings as "non-recurring," though there's nothing non-recurring about Trump's tariff regime. The combined AVO/CVGW entity would be even more Mexico-concentrated.

Antitrust is the other question mark. The two largest US avocado packers/distributors merging into one. No DOJ/FTC commentary has surfaced. This may be why the S-4 is delayed — pre-filing antitrust consultation could be ongoing.

The Company Behind the Deal

Calavo is a chronic underperformer being put out of its misery. Five CEOs in five years. Five-year TSR: $100 became $37. FY2025 GAAP net income was $19.8M — the first positive year since FY2020. Adjusted net income was $28.9M, but that required $9.1M in add-backs including a $5.1M FDA regulatory hold charge (details undisclosed), $1M internal investigation costs, and the tariff charges. Management missed its own $34M bonus threshold. No executive bonuses were paid.

The 10-K/A reveals the governance cleanup before close: new CEO (former CFO, brought back from board), retention agreements for remaining executives ($559K for CFO, $447K for EVP, payable at change of control), and $13.6M in related-party avocado purchases from a director and the former CEO. None of this is alarming for a growers' cooperative-style business being acquired, but it paints the picture of a company that ran out of ways to fix itself.

Conclusion

No alpha. The spread is objectively interesting at 9.5%, the S-4 delay explains why it's wide, and the zero-correlation anomaly confirms the market is pricing a genuinely uncertain binary. But we have no edge on any of the five deal completion factors. M&A arb is not our lane. Two analysts cover this company — structurally in our edge zone, but the wrong type of trade.

Prediction recorded: 72% the deal closes by July 14, 2026. For calibration, not for capital.

Evidence