(CORRECTED) Six countries have already approved Dole Food Co.’s sale of its packaged foods operation and fresh business in Asia, but the Westlake, Calif., firm is still waiting for China to OK the deal.
The $1.68 billion sale to Tokyo-based Itochu Corp. is expected to be completed early this year, Dole officials said in a news release.
Dole officials are also waiting to find out how much effect a Dec. 4 typhoon had on the banana growing regions of the Philippines. In their news release they said estimates show the Asian banana industry will lose about 14% of its fruit on an annualized basis, which is about 30 million boxes.
The Philipino Banana Growers and Exporters Association issued a statement Jan. 2 warning that production could be down by a third. Data from the Philipino government showed about 64,200 acres of banana plantations were damaged by the typhoon.
Despite those losses, Dole’s incoming president and chief operating officer C. Michael Carter said in the news release that there has not been a pricing effect in North American and Europe. He said Dole is continuing to see aggressive contract negotiations in North America with some importers seeking to buy market share.
David Murdock, Dole’s chairman who is returning to the post of chief executive officer, said the banana market “remains challenging.” Murdock, however, said he is optimistic about the long-term future of the company, referring to Dole’s “right-sizing efforts … within Dole’s remaining fresh fruit and vegetable businesses.”
Carter said in the release that the fresh fruit business of “the new Dole is continuing to experience declining earnings in a continued difficult economic environment.”
David DeLorenzo is moving from the post of chief executive officer, according to statements from the company in December. DeLorenzo will join Itochu Corp. to oversee the packaged foods and Asia fresh fruit business the Tokyo company is buying from Dole.
In addition to juggling top executives, the sale is predicted to make business easier for Dole because of a $400 million term loan and $300 in revolving credit the company expects to receive after the deal is completed, Carter said in the news release. He said the loan and the proceeds from the sale would allow Dole to pay off about $1.7 billion in existing debt.
Note on correction: The original version of this story incorrectly stated the situation surrounding David Delorenzo's move to Itochu Corp. He is the CEO of Dole and will remain so until the sale of the packaged foods and Asia fresh businesses to Itochu is completed.