Dole Food Co., Inc. recently announced that it has moved much closer to completing the sale of its worldwide packaged foods and Asia fresh businesses to ITOCHU Corp. for $1.685 billion in cash, with stockholder approval of the sale at a special meeting of stockholders held at the Dole headquarters in Westlake Village, Calif. The transaction has already received required regulatory approval in six of seven reviewing countries, and both Dole and ITOCHU are continuing to work toward consummating the sale by Dec. 31, 2012, subject to final regulatory approval from China.
The consummation of the sale will result in a substantial portion of Dole’s operations being sold to ITOCHU, with the new Dole having a smaller footprint with two lines of fresh produce businesses: fresh fruit and fresh vegetables. The Dole operations will no longer include the worldwide packaged foods and Asia fresh businesses, resulting in overall revenue for the new Dole in the approximate $4.2 billion range with revenue from its fresh fruit business line being reduced in size by approximately 30 percent.
Dole will be putting in place a new capital structure at the time of consummation of the sale which, together with substantially all the proceeds from the sale transaction, will be used to pay off existing indebtedness and to provide funding for transaction-related taxes, costs and expenses, the possible settlement of some or all of Dole’s long-term Japanese yen hedges, anticipated post-closing restructuring expenses and other corporate purposes. It is expected that the new Dole will benefit from a significant reduction in interest expense and a substantially reduced leverage ratio on a going forward basis.
“This is a transformative transaction for our company and we are pleased to have received stockholder approval today,” said David H. Murdock, Dole’s chairman, in a prepared statement. “While Dole’s fresh produce business will be significantly smaller and is continuing to experience declining earnings in a continued difficult economic environment both in the U.S. and in Europe, I am very optimistic about the long-term future of Dole and its prospects. We will remain an industry leader in the sourcing, distribution and marketing of bananas, pineapples and other tropical fruits, packaged salads, fresh-packed vegetables and fresh berries. With the planned substantial reduction in debt and the eventual lower cost structure from right-sizing our organization, Dole will be well positioned to pursue growth opportunities within the fresh produce industry.”
Dole also announced planned leadership changes in connection with the sale transaction. Murdock will return to the role of chairman and chief executive officer, and C. Michael Carter will assume the added role of president and chief operating officer with all operating and corporate functions reporting to him. Carter will also be rejoining Dole’s board. In addition, Keith C. Mitchell, current chief financial officer of Dole’s North American Fresh Fruit business, will become chief financial officer; A. Charlene Mims, currently responsible for benefits and payroll, will lead human resources; and both Beth Potillo, current treasurer, and Yoon J. Hugh, current controller and chief accounting officer, will become senior vice presidents with added responsibilities.
“These are important leadership changes as we work toward right-sizing Dole and refocusing our businesses for growth,” said Murdock. “Michael Carter is a talented leader with a results-oriented operational focus, who as Dole’s executive vice president and general counsel has worked with me in leading Dole through our most significant strategic events and challenges, since joining Dole in October 2000. Michael brings years of experience in a number of industries, with a varied history of operational and legal roles. I am confident in his ability to right-size Dole and deliver synergies within our remaining businesses.”