Dole to Sell Some Businesses to Itochu for $1.69 Billion

Dole Food Co. (DOLE) said it has agreed to sell its worldwide packaged foods and Asia fresh produce businesses for about $1.69 billion in cash to Japan's Itochu Corp. (ITOCY, 8001.TO), a deal that will create a more focused company and reduce its debt.

Shares jumped 3.7% to $14.20 after hours Monday as the U.S. company also said it will adopt cost-saving and corporate restructuring initiatives.

Dole said cash proceeds from the deal will be used for debt reduction, pay deal-related expenses, restructuring and for corporate purposes.

Dole will retain its entire North American fresh vegetables business and its fresh fruit businesses in North America, Latin America, Europe and Africa. The company said it will streamline its global personnel and corporate structure to conform to the specific needs of its remaining businesses. These measures will be fully implemented by the end of fiscal 2013 and are expected to result in annual cost savings of $50 million, Dole said. It will recapitalize its debt structure, with any new debt expected to be issued on more-favorable terms, the company added.

Dole said the sale of these businesses, which together had revenue about $2.5 billion in 2011, is the result of its strategic business review process it launched earlier this year.

"We are realizing a premium valuation for our worldwide packaged foods and Asia fresh produce businesses and will retain a strong fresh produce business that has increased financial flexibility to grow," said Dole President and Chief Executive David A. DeLorenzo.

Dole confirmed last week it was in advanced discussions with Itochu about the possible sale of the U.S. company's packaged-foods and Asian fresh fruit and vegetable businesses

Dole launched a strategic review of its businesses in May after reporting a slump in profits. In July, the company said it was considering a full or partial separation of one or more of its business, including potential spinoffs, joint ventures and sales transactions.

Dole's second-quarter profit fell 21% as the company saw lower fresh fruit revenue, though sales of fresh vegetables and packaged foods improved.

Through Monday's close, the stock has gained 48% over the past three months.

Write to Nathalie Tadena at [e-mail]

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