Ireland's Total Produce acquires 45% stake in Dole Food

Ireland's Total Produce, a leading European fresh produce company, has agreed to acquire a 45 percent stake in U.S.-based Dole Food Company for $300 million.1 The terms of the transaction reflect an enterprise value for Dole of about $2 billion.

The deal, which brings together two leading companies in the fresh produce space with complementary market positions, comes only weeks after talks regarding a takeover of Dole by Belgium-based Greenyard collapsed. For Total Produce, the decision to pursue the acquisition was driven by the belief that consumer trends toward healthier lifestyle choices will buoy the fresh produce market.

This belief has been echoed by the report, Fresh Produce: U.S. Market Trends and Opportunities issued by Research and Markets in December 2017, which found that consumer attitudes will shape the market, and as fruit and vegetables, which are often marketed as non-GMO, organic, and local, fit well into this growing narrative.

"We are delighted to have signed an agreement with Dole, long held in the highest regard as one of the world's best fresh produce companies, with iconic brands dating back to 1851," said Carl McCann, chairman of Total Produce.

It also is an additional step in Total Produce's North American expansion, building upon a string of acquisitions that include a 65 percent stake in Los Angeles-based Progressive Produce in 2016; followed by increasing its stake in British Columbia-based Oppenheimer Group from 35 percent to 65 percent in February 2017; and a 50 percent stake in California-based distributor, The Fresh Connection, in November 2017.

However, the acquisition of Dole dwarfs these deals combined; with Total Produce's annual revenue of $4.97 billion, combined with Dole's annual revenue of $4.45 billion.

Founded in 1851, Dole is a leading global producer, marketer, and distributor of fresh fruit and vegetables, providing a diverse portfolio of products to retail, wholesale, and foodservice customers. As of March 25, 2017 the company operated 123,600 acres of farms around the world and had 14,800 acres of idle land for sale in Oahu, Hawaii. It controls a fleet of 15 refrigerated ships, 11 cold storage facilities, 15,600 refrigerated containers, 75 packing houses, and six salad manufacturing facilities.

The company holds the number one position for bananas and number two position for pineapples in North America, as well as the number two position for fresh-cut salads in North America, and the number three position for both bananas and pineapples in Europe.

In the short term, the deal is expected to generate cost savings and synergies of between $15 million and $20 million per year, and $35 million per year in the long term.

"I believe that this investment by Total Produce in Dole is the single most positive step in our company's history," said McCann. "It places Total Produce at the forefront of our industry, and we anticipate it will create significant additional value for shareholders in the years ahead."

Moving forward, the two companies will share equal board governance and representation, and David H. Murdock will continue in his position as chairman at Dole, while Carl McCann will assume the role of vice chairman.

Within the next five years, Total Produce has the right to acquire the remaining 55 percent in Dole, valued at between $562 million and $762 million, according to the Belgian magazine De Tijd, reports Fresh Plaza. If Total Produce does not move on the acquisition, Murdock will then have the right to sell outside of the agreement.

Murdock himself, reached an agreement with the company to acquire Dole in 2013 through a $1.2 billion cash deal which, when including an assumption of debt, will make the total value of the purchase $1.6 billion.