China has approved the sale of Dole’s worldwide packaged foods and Asia fresh produce business to Itochu Corp.
“We have now received all seven required regulatory approvals, and Dole expects to complete the sale within the next 30 days,” C. Michael Carter, executive vice president and general counsel, said in a news release.
The Chinese Ministry of Commerce approved Dole’s antitrust filing with no conditions in its Jan. 21 decision.
The $1.68 billion sale agreement with Tokyo-based Itochu was reached in September. Proceeds will reduce Dole debt, among other purposes. Itochu gains exclusive rights to the Dole trademark on packaged food products worldwide and on fresh produce in Asia, Australia and New Zealand.
For its remaining lines of fresh produce business, Dole reported an 11% drop in revenues to $4.2 billion in 2012 from the prior year. The decline was due mainly to divestitures of fresh fruit subsidiaries in Germany and Spain, which represented $539 million of sales in 2011.
Apart from the divestitures, fresh fruit revenues fell 2%. That came as a result of lower pricing in North America bananas and unfavorable euro and Swedish krona foreign currency movements in Europe, according to Dole. Those conditions were partly offset by higher sales volumes of fresh pineapple and improved pricing for Chilean deciduous fruit.
Fresh vegetable revenues rose 8% primarily due to improved pricing for packaged salads and profits from an October 2011 berry acquisition, which contributed $68 million to sales in 2012. This was partially offset by lower pricing for fresh-packed vegetables. Not counting sales from the acquisition, fresh vegetables revenues improved 3%.
“Fresh fruit performance in 2012 was below 2011, and we expect this trend to continue in 2013,” Carter said in the release. “We continue to see aggressive contract negotiations in the North American banana market, driving earnings in that market to lower levels. We expect fresh vegetables adjusted earnings (before interest, taxes, depreciation and amortization) to improve in 2013, but not enough to offset the expected continued decline in the North America banana market.”
Given competitive market conditions, Dole is assessing capital requirements and possible near-term funding sources such as its Hawaii land holdings, Carter said in the release.
Carter will add the titles of president and chief operating officer in connection with the Itochu deal.