Dole shares up 10% amid talks on sale to Itochu

DOLE FOOD Company said it was in advanced talks to sell its packaged foods and Asian fresh fruit and vegetable businesses to Japanese trading house Itochu Corp, causing shares in the world’s largest fruit and vegetable company to jump almost 10 per cent.

Dole, founded in 1851, has struggled with volatile demand and low prices for bananas, its biggest-selling product.

In contrast, thanks to a strong yen and flush reserves of cash, Japanese trading houses have been active in overseas acquisitions, particularly non-resources firms, as they look to diversify their profit streams. In May, Marubeni announced a multi-billion dollar deal to buy US grain merchant Gavilon and last year Mitsui Co spent a little more than $1 billion for a stake in Asia’s largest hospital operator IHH Healthcare.

No definitive terms have been signed with Itochu and Dole remains in discussions with other parties about selling these and other assets, Dole said in a statement. Itochu could pay about $1.7 billion for the Dole businesses, a person familiar with the matter said.

Itochu will set up a new company to acquire the two Dole business segments, Itochu said in a statement yesterday. The new company is slated to be established in November with capital investment to be determined.

Of Itochu’s 280 billion yen (€2.8 billion) net profit projected in the year to March 2013, the trading house estimates about 15 per cent will come from its food business, compared to the almost 40 per cent expected from its metals division.

Dole, which distributes produce and fresh fruit worldwide, began exploring strategic options in May and said in July it was in talks to sell or spin off its packaged foods business and was considering a deal in Asia.

Dole’s packaged foods business includes canned pineapple and pineapple juice, fruit juice concentrate and frozen fruit. Its other businesses sell fresh bananas, pineapples and berries, and more than 20 types of fresh vegetables as well as bagged salads.

Shares of Dole, which went public in October 2009, rose almost 10 per cent to $14.07 on Wednesday. Itochu shares rose 0.5 per cent to 804 yen in early trade yesterday. – (Reuters)