US-based Dole Food has entered into a definitive agreement to sell its worldwide packaged foods business and Asia fresh produce business to Japanese trading house Itochu for $1.685bn in cash.
Dole plans to use the cash proceeds from the transaction to lower debt, pay deal-related expenses, and implement a restructuring plan, which is expected to be completed by the end of fiscal 2013 and generate cost savings of $50m annually.
Dole worldwide packaged foods business offers fruit parfaits, canned pineapple juice, canned pineapple , fruit juice concentrate, fruit in plastic cups, jars and pouches, healthy snack foods and frozen fruit. Its fresh produce business grows, sources, ships and fresh fruit and vegetables, primarily in Asia.
In 2011, the combined businesses reported an adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $190m, and revenues of approximately $2.5bn.
The transaction, which is subject to Dole stockholder approval and customary regulatory approvals in several countries, is expected to be completed in the fourth quarter of fiscal 2012.
Following the completion of the deal, Itochu will have exclusive rights to use Dole trademark on packaged food products worldwide and on fresh produce in Asia, Australia and New Zealand.
Dole Food Company will continue to own its North American fresh vegetables business as well as its fresh fruit businesses in North America, Latin America, Europe and Africa, which together posted revenues of $4.2bn fiscal 2011.
Dole Food, a producer and marketer of fruit and fresh vegetables, has been affected by volatile demand and low prices, and its net income from continuing operations fell about 21% to $66m for the second quarter ended 16 June 2012.
In May 2012, the company began evaluating strategic options, and in July 2012 it announced plans for a complete or partial separation of one or more of its businesses, including potential spin-offs, sales transactions and joint ventures.
