A merger has been agreed in the global fruit and vegetable sector that will see Ireland’s Total Produce combine with Dole Food Co. in the US to create a new publicly-listed entity.
Total Produce owns 45% of Dole Food through a deal struck in 2018, when the Irish firm acquired the stake from David Murdock, the CEO of Los Angeles-based Castle & Cooke, which still holds the remaining 55% of the business via the parent company Dole Holdings.
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By GlobalDataThose three parties will now form Dole plc under a binding agreement announced today (17 February).
“The transaction will simplify the existing structure between the two companies by unifying Dole and Total Produce under common ownership, with the objective of enabling full operational integration, realisation of synergies and value creation across the enlarged business,” a statement read.
Under the agreement, Total Produce will hold 82.5% of the new business and Castle & Cooke 17.5%. The combination will create a company with about US$9.7bn in annual revenues, $379m in adjusted EBITDA and assets amounting to $4.5bn. The deal is subject to approval by Total Produce shareholders and regulators.
Carl McCann, the chairman of Total Produce, said: “Our intention to list the new company in the United States marks an exciting next step for Dole plc. 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. We look forward to beginning this next chapter and providing increased opportunity for our shareholders, dedicated employees, customers, suppliers and partners.”
It is expected that Dole plc will “pursue synergistic M&A in a fragmented and structurally growing industry”.
Once the listing is completed, the transaction will see Total Produce de-list its shares on the Euronext Dublin bourse and the London Stock Exchange. Meanwhile, the plc will seek to raise $500-700m from the equity market to “strengthen and de-lever the combined balance sheet” against a target of three times net debt to adjusted EBITDA.
Dole plc expects to deliver adjusted EBITDA synergies of between $30-40m over the medium term.
Dole plc will be incorporated in Ireland, with its global headquarters based in Dublin and its US HQ in Charlotte, North Carolina. In terms of management, McCann will be chairman of the plc, while Total Produce’s CEO Rory Byrne will take on the same role at the new entity.
Johan Lindén, the current CEO of Dole, will become COO of Dole plc, while Frank Davis, the finance chief at Total Produce, will become CFO of the new business. Johan Malmqvist, the current CFO of Dole, will become executive-vice president of finance of Dole plc.
“Product synergies will come from accelerated strategic development of high-growth products such as avocados and soft fruit, the promotion of the Dole brand with the Total Produce brands, and the utilisation of existing infrastructure and distribution networks in the key markets of North America and Europe,” the statement read.
It continued: “Revenue enhancement will come from increased collaboration between Total Produce and Dole in regions such as the UK, France and Spain, and further development of the service provision model with key retail customers.”
