Dole to complete sale of packaged foods and fresh produce businesses

US-based Dole Food is set to complete the sale of its worldwide packaged foods and Asia fresh produce businesses to Japanese trading house ITOCHU for $1.68bn on 1 April.

The Japanese firm paid Dole a non-refundable cash deposit of $200m to be applied toward the purchase price, and the companies have agreed that the deposit will be retained by the latter if the transaction is not complete by 1 April.

Dole plans to use the amount to temporarily repay revolver borrowings, certain transaction related expenses and general corporate purposes.

As part of the extension agreement, David A DeLorenzo, who has stepped down from his roles as president and chief executive officer of Dole, will immediately assume a full-time position leading the management team of the businesses being sold to ITOCHU until the closing date.

Following the completion of the deal, DeLorenzo will join ITOCHU as the senior management of these businesses.

This latest extension agreement follows the definitive acquisition agreement signed by the two parties on 17 September 2012.

On completion of the deal, a major percentage of Dole’s operations will being sold to ITOCHU.

Dole Food chairman David H Murdock said that following the deal, Dole will have a smaller footprint as a commodity produce company with overall revenue in the $4.2bn range with two lines of business, fresh fruit and fresh vegetables.

"ITOCHU will have exclusive rights to the Dole trademark on packaged food products worldwide and on fresh produce in Asia, Australia and New Zealand," he said.

Dole’s worldwide packaged foods business has a product portfolio of fruit parfaits, canned pineapple juice, canned pineapple, healthy snack foods and frozen fruit, while its fresh produce business grows, sources and ships fresh fruit and vegetables, primarily in Asia.

In January 2013, Dole announced that it has received approval from the Chinese Ministry of Commerce to carry out the sale.

According to the company, the deal is a part of its plan to lower debt, pay deal-related expenses and generate cost savings of $50m annually.