Dole Food Co. (DOLE) said it has agreed to sell its worldwide
packaged foods and Asia fresh produce businesses for about $1.69
billion in cash to Japan's Itochu Corp. (ITOCY, 8001.TO), a deal
that will create a more focused company and reduce its debt.
Shares jumped 3.7% to $14.20 after hours Monday as the U.S.
company also said it will adopt cost-saving and corporate
restructuring initiatives.
Dole said cash proceeds from the deal will be used for debt
reduction, pay deal-related expenses, restructuring and for
corporate purposes.
Dole will retain its entire North American fresh vegetables
business and its fresh fruit businesses in North America, Latin
America, Europe and Africa. The company said it will streamline its
global personnel and corporate structure to conform to the specific
needs of its remaining businesses. These measures will be fully
implemented by the end of fiscal 2013 and are expected to result in
annual cost savings of $50 million, Dole said. It will recapitalize
its debt structure, with any new debt expected to be issued on
more-favorable terms, the company added.
Dole said the sale of these businesses, which together had
revenue about $2.5 billion in 2011, is the result of its strategic
business review process it launched earlier this year.
"We are realizing a premium valuation for our worldwide packaged
foods and Asia fresh produce businesses and will retain a strong
fresh produce business that has increased financial flexibility to
grow," said Dole President and Chief Executive David A.
DeLorenzo.
Dole confirmed last week it was in advanced discussions with
Itochu about the possible sale of the U.S. company's packaged-foods
and Asian fresh fruit and vegetable businesses
Dole launched a strategic review of its businesses in May after
reporting a slump in profits. In July, the company said it was
considering a full or partial separation of one or more of its
business, including potential spinoffs, joint ventures and sales
transactions.
Dole's second-quarter profit fell 21% as the company saw lower
fresh fruit revenue, though sales of fresh vegetables and packaged
foods improved.
Through Monday's close, the stock has gained 48% over the past
three months.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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