The US fruit and vegetable producer Dole Food is to merge with Ireland-based Total Produce to create a US-listed group that will be the world’s largest fresh produce company.
Total Produce, which has owned 45 per cent of the US group since 2018, on Wednesday said it had reached a deal with Castle & Cooke, a real estate company that owns a majority stake in Dole’s parent company Dole Holdings, to combine the two and form a company with about $9.7bn of annual revenues.
Shareholders in Total Produce, which was formed in 2006 by a demerger from tropical fruit group Fyffes, will receive 82.5 per cent of shares in the new Ireland-incorporated entity, Dole plc, while Castle & Cooke shareholders will receive the remaining 17.5 per cent.
Dole plc will list on a big US exchange as a condition of the transaction and to raise $500m to $700m, mainly to be used on cutting debt; Total Produce will delist from the London Stock Exchange and Euronext.
The new group will be headed by Rory Byrne, chief executive of Total Produce, while Dole chief executive Johan Lindén will become chief operating officer.
Shares in Total Produce rose 18.6 per cent to £1.66 on the news. The deal remains contingent on regulatory approval, the backing of Total Produce’s shareholders and the listing raising at least $2.60 a share. This would represent a premium of 47 per cent to Total Produce’s latest closing price, said analysts at Davy Group.
The companies said the deal would enable “portfolio diversification in large stable categories (bananas, pineapples, fresh and value-add vegetables) allied with above-market growth opportunities in segments such as soft fruit, avocados and organics”.
Carl McCann, chairman of Total Produce, said the deal “combines two highly complementary premium businesses to create the global leader in fresh produce. 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”.
Total Produce is Europe-focused and operates business-to-business brands, while consumer-facing Dole has a strong heritage in the Americas.
Total Produce said the transaction would deliver savings of $30m to $40m over the medium term as the two companies combine their operations, helping the company to work towards a long-term target of 5 to 7 per cent annual growth in earnings before interest, tax, depreciation and amortisation.