UPDATED: Total Produce to combine with Dole Food Company
Meet the new global leader in produce marketing.
Ireland-based Total Produce will combine with Dole Food Co. to create a unified company called Dole plc worth nearly $10 billion in 2020 revenue and ranking first among all global produce operators. By way of comparison, Fresh Del Monte Produce has annual sales of about $5 billion.
As a condition of the transaction, the company will become publicly listed on a major stock exchange in the U.S. as Dole plc.
Total Produce, Dole Food Co. Inc. and affiliates of Castle & Cooke Inc., which own a 55% interest in Dole’s parent company, Dole Holdings, said they entered into a binding transaction agreement to combine under the newly created U.S.-listed company, Dole plc.
Total Produce, which was formed in 2006 when it separated from Fyffes, has owned 45% of Dole since 2018.
Under the terms of the new agreement, Total Produce shareholders will receive 82.5% of Dole plc shares and the Castle & Cooke shareholders will receive 17.5% of Dole plc shares.
“I am delighted with this transaction, which combines two highly complementary premium businesses to create the global leader in fresh produce,” Carl McCann, chairman of Total Produce, said in a news release.
“I am confident the combined business will open new avenues of value creation for shareholders and pursue innovation in healthy nutrition for our customers worldwide.”
McCann said the intention to list the new company in the U.S. is an exciting “next step” for Dole plc.
The new company, operating under the Dole brand, will be incorporated in Ireland, with its global headquarters in Dublin. Its headquarters for the Americas will be in Charlotte, N.C.
Rory Byrne, CEO of Total Produce, will assume that role for Dole Plc. Johan Lindén, current CEO of Dole, will become chief operating officer.
Dole plc is required to complete an initial public offering and a related listing on a major U.S. stock exchange, still to be determined. As part of the listing, Dole will raise $500 million to $700 million, and use those funds mainly to reduce debt.
Total Produce shareholders are expected to own approximately 55% of Dole plc on a fully diluted basis and the C&C shareholders are expected to own approximately 10% of Dole plc on a fully diluted basis. The remainder will be held by investors participating in the equity capital raise, according to the release.
“The combined company will become the largest global player with over 170 years of history in fresh produce in both companies, a highly diversified portfolio, resilient earnings and a strong balance sheet that positions us well for accelerated growth,” McCann said in the release.
“We look forward to beginning this next chapter and providing increased opportunity for our shareholders, dedicated employees, customers, suppliers and partners.”
Dole customers should expect Dole to continue to operate as usual as the company works to satisfy all conditions to closing the transaction, Bil Goldfield, director of corporate communications for Dole Food Co., said in an e-mail.
“Both Total Produce and Dole have shared missions to supply and promote healthy nutrition to the world, and both companies have taken a leadership role in transforming the fresh produce industry to become more sustainable and have made strong public commitments to reduce their impacts and improve their sustainability performance,” Goldfield said.
“This process will be seamless for all customers as we continue providing the exceptional level of service they have come to expect from Dole. We are all excited to begin this journey as a combined entity bringing together two great teams and businesses, which will set us up for new growth and opportunities.”
The board of directors of Total Produce thinks Dole plc will have long-term organic growth potential of 2% to 3% per year, “enhanced further by development opportunities,” according to the release.
Dole plc earnings stability will be supported by increased diversification and an integrated supply chain, with a long-term target to achieve 5% to 7% growth per year in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
The company will benefit from strong cash flow generation to fund a dividend pay-out ratio in line with Total Produce’s historical pay-out ratio, the release said.
Dole plc, according to the release, will be the global No. 1 in fresh produce with estimated combined 2020 revenue of approximately $9.7 billion, adjusted EBITDA of approximately $379 million and total assets of approximately $4.5 billion, according to the release.Besides its ties to Dole Food, Total Produce has invested in North American produce companies Eco Farms, The Oppenheimer Group, Progressive Produce, Gambles Ontario Produce Inc. and Keystone Fruit Marketing.
The track record of the acquisitions by Total Produce reflects a long-term vision, said Dick Spezzano, president of California-based Spezzano Consulting Service Inc.
“They don’t go in and buy companies, fix them up and sell them,” he said.
“They buy companies, and they want to operate those companies, with their existing management in place.”
