Dole Food in talks to sell two businesses to Itochu

US-based Dole Food is in advanced talks with Japanese trading house Itochu over the sale of its packaged foods business and Asian fresh fruit and vegetable business.

Itochu may pay about $1.7bn to acquire the businesses, according to media reports.

In a statement, Dole Food said that no definitive agreements have been made and it is continuing discussions with several other parties regarding the sale of these assets and others.

Itochu noted that it plans to establish a new company in order to acquire the Dole businesses, if an acquisition agreement is executed.

The new company, which will be based in Tokyo, Japan, is scheduled to be established in November 2012.

Dole Food’s packaged foods business offers fruit parfaits, snack foods, frozen fruits, canned pineapple juice and fruit juice concentrate, as well as fruits in plastic cups, jars and pouches.

Its Asian fresh fruit and vegetable business sells fresh pineapples, bananas, berries and more than 20 different varieties of fresh vegetables, including bagged salads.

Dole Food, a producer and marketer of fruit and fresh vegetables, has been affected by volatile demand and low prices, and its net income from continuing operations fell about 21% to $66m for the second quarter ended 16 June 2012.

In May 2012, the company began evaluating strategic options, and in July 2012 it announced plans for a complete or partial separation of one or more of its businesses, including potential spin-offs, sales transactions and joint ventures.

Itochu, which is involved in several business including textiles, machinery, chemicals and food, expects to post a net profit of JPY280bn ($3.6bn) in the year ending to March 2013, of which about 15% is forecast to come from its food business, and 40% from its metals division.