DOLE Food Company said yesterday it will sell two businesses to Japan’s Itochu for $1.7bn (£1.05bn) in cash – a deal that will help the world’s largest fruit and vegetable producer pay down its heavy debt load while expanding Itochu’s food presence in new markets such as China.
Dole has been struggling with volatile demand and low prices for bananas, its biggest-selling product. The sale of its worldwide packaged foods and Asia fresh produce businesses is set to result in a significant reduction in its $1.7bn of net debt, as well as pay for restructuring costs.
By contrast, Japanese trading houses are keen to diversify their profit streams away from energy and mining-related businesses and have stepped up overseas acquisitions thanks to a strong yen and flush reserves of cash.
Japan’s third-largest trading company has a stake in Ting Hsin, China’s biggest food distribution company, and the purchase will also give it Dole’s ripening and distribution centres in the east and northeast of the world’s most populous country. It has distributed Dole products in Japan for nearly half a century.
Itochu will also gain control of plantations growing bananas and other fruits, canneries and processing factories in Asian countries, including China, South Korea, Philippines, Taiwan and Thailand. It will have exclusive rights to the Dole trademark on packaged food products worldwide.
City A.M. Reporter