Dole to Close Sale of Worldwide Packaged Foods, Asia Fresh Units; Mitchell Becomes CFO, DeLorenzo Stepped Down as CEO, Pres
Dole Food Company, Inc. (NYSE: DOLE) announced today that the previously announced sale of its worldwide packaged foods and Asia fresh produce businesses to ITOCHU Corporation for $1.685 billion in cash, will be completed on April 1, 2013. Dole and ITOCHU have agreed to this firm fixed closing date at ITOCHU's request, and have extended the term of the definitive acquisition agreement signed by the parties on September 17, 2012, to the April 1 date. ITOCHU today paid Dole a non-refundable cash deposit of $200 million to be applied toward the purchase price, and the parties agreed that, with limited exceptions, the deposit will be forfeited and retained by Dole if the closing does not occur by April 1, 2013. Dole intends to use the $200 million in cash to temporarily repay revolver borrowings, certain transaction related expenses, and general corporate purposes.
“The consummation of the sale on April 1^st will complete this transformative transaction for Dole, resulting in a major percentage of Dole's operations being sold to ITOCHU. The new Dole will have a smaller footprint as a commodity produce company with overall revenue in the $4.2 billion range with two lines of business: fresh fruit and fresh vegetables,” said David H. Murdock, Dole's Chairman. “ITOCHU will have exclusive rights to the Dole® trademark on packaged food products worldwide and on fresh produce in Asia, Australia and New Zealand. We will remain an industry leader in the sourcing, distribution and marketing of bananas, pineapples and other tropical fruits, packaged salads, fresh-packed vegetables and fresh berries.”
As part of the extension agreement, David A. DeLorenzo, current President and Chief Executive Officer of Dole, will immediately assume a full-time position leading the management team of the businesses being acquired by ITOCHU through the closing date, after which he will join ITOCHU as the senior management of these businesses. Mr. DeLorenzo has stepped down from his roles as President and Chief Executive Officer of Dole, but will remain on Dole's Board of Directors following completion of the sale transaction. In addition, as previously announced, Joseph S. Tesoriero has stepped down from his position as Executive Vice President and Chief Financial Officer. Mr. DeLorenzo and Mr. Tesoriero will remain employees of Dole through the closing of the sale to ITOCHU.
As part of the previously announced leadership changes in connection with the sale transaction, Mr. Murdock has returned to the role of Chairman and Chief Executive Officer, and C. Michael Carter has assumed the added role of President and Chief Operating Officer, with all operating and corporate functions reporting to him. In addition, Dole's Board increased its size to nine, and Mr. Carter and E. Rolland Dickson, M.D. have rejoined the board. Dr. Dickson previously was a professor of medicine at the Mayo Medical School and director of development at the Mayo Foundation for Medical Education and Research. Dr. Dickson is internationally recognized for his leadership in the fields of liver disease and liver transplantation, and has served as a director of Poniard Pharmaceuticals, Axcan Pharma Inc., and Pathway Corp.
In addition, Keith C. Mitchell, current chief financial officer of Dole's North American Fresh Fruit business, has become Chief Financial Officer; A. Charlene Mims, currently responsible for benefits and payroll, will lead Human Resources; both Beth Potillo, current Treasurer, and Yoon J. Hugh, current Controller and Chief Accounting Officer, have become Senior Vice Presidents with added responsibilities; and Genevieve M. Kelly, current Vice President, Associate General Counsel & Assistant Secretary, as well as division general counsel for the fresh fruit business, has become Deputy General Counsel.
On January 24, 2013, Dole announced fiscal year 2012 results for the two lines of fresh produce business that will remain with the new Dole following the consummation of the sale transaction. Fresh fruit performance is continuing its declining trend, principally due to banana market conditions, and Dole expects that 2013 Adjusted EBITDA for these businesses will be at the low end of the previously announced guidance range of $150 - $170 million, with income from continuing operations, net of income taxes, in the $45 - $60 million range, assuming no major market changes. Dole expects to timely file its annual report on Form 10-K by March 14, 2013, if not sooner, including its audited financial statements for fiscal year 2012. At that time, Dole expects to issue an earnings release and will host a conference call with investors.
In light of the current competitive fresh produce market conditions, Dole has assessed its ongoing capital requirements and possible near-term funding resources for the new Dole, including Dole's Hawaii land holdings, and is actively marketing the approximately 21,800 acres of land that it is not currently farming in Hawaii on the Island of Oahu. Dole is seeking to sell as much of this land as it possibly can each year, expecting that it will take a few years to sell such a large quantity of farm land. Targeted proceeds are in the $175 – $200 million range, which would exceed current book value. Potential proceeds may be used to invest in both increasing the number of fresh fruit farms owned and operated by the new Dole and in updating Dole's owned vessel fleet.
Dole has provided earnings guidance to give investors general information on the overall direction of its remaining businesses following the sale transaction. The guidance provided is subject to numerous uncertainties, including, among others, the timing and ultimate consummation of the sale transaction, overall economic and capital-market conditions and the markets for fresh fruits and vegetables. Dole does not intend, and undertakes no obligation, to update its forward-looking statements, including projections and future prospects.
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