After several rumored deals and a bid by ownership to take the company public, Westlake Village-based Dole Food Co. Inc. sold off a 45 percent equity stake to Dublin-based Total Produce for $300 million.
The deal was announced in February and consummated in July. The companies agreed on several future benchmarks under which Total Produce could purchase additional equity in Dole.
Dole owner David Murdock said in July that the deal created a partnership with Total Produce that would benefit both companies.
“I am excited for the future of Dole in our relationship with Total Produce,” Murdock said. “They have a long and successful history in the produce industry, and I have complete confidence that as the premier produce brand, Dole will be able to tap that expertise in growing our position worldwide. Both Dole and Total Produce have a standard of perfection that leads the industry in innovation; together we will further our joint mission of providing the highest quality produce to the world.”
Dole also announced in December plans to sell its Saba Fresh Cuts AB and Saba Fresh Cuts OY divisions to BAMA International. Saba makes prewashed, ready-to-eat salads. The sale of Saba Fresh Cuts AB was necessary for the European Commission to approve the investment made by Total Produce in Dole.
Ian Hunter, an analyst with Investec Bank, said the lack of overlap, both in products and geography, made the deal beneficial to both parties.
Dole, he said, is focused on North America, bananas and value-add vegetables like salads. Total Produce is European-focused but expanding in North America and has a diverse product offering.
“The deal is beneficial for both parties,” Hunter wrote in an email. “For Total Produce it gives it scale in North America, a market where fruit and vegetable imports (current trade environment notwithstanding) are on the increase. The European import market is more mature with little to no growth. For Dole, it brings in a player with a strong balance sheet, which will go some way to stabilizing Dole’s debt position.”
Murdock was No. 19 on the Los Angeles Business Journal’s 2018 Wealthiest Angelenos list where his net worth was pegged at roughly $4 billion.
He kept his job as chairman of Dole after the deal with Total Produce Chairman Carl McCann stepping in to serve as vice chairman of the Westlake Village company.
“We are delighted to conclude this very substantial transaction with David Murdock who has been an inspirational and visionary leader since he acquired a majority shareholding in Dole in 1985,” McCann previously said in a statement. “Dole is one of the world’s foremost fresh produce companies and we look forward with great enthusiasm to working very closely together with David and his excellent management team to continue to develop the business in the future.”
Dole is one of the largest manufacturers of fruit and vegetables in the world. It sells bananas, pineapples, and other fruits and vegetables.
Beyond its Westlake Village headquarters, Dole also has locations in Hawaii and North Carolina. Locally, it uses the Port of San Diego as an entry point for its goods.
Dole did not return requests for comment. Total Produce declined to comment.
Under Dole’s deal with Total Produce, the Irish company has the option to purchase all of Dole after two years. If it does not purchase Dole after five years, all of Dole’s common stock can be sold.
Some are speculating that this arrangement allows Total Produce to reduce Dole’s debt before putting it on its balance sheets.
“We believe that there is no question that Total Produce is confident that it will be in a position to complete the deal within the five-year period but the deal has been structured this way to give both parties time to address Dole’s debt position,” Investec analyst Hunter said.
The global fruit and vegetable market has been dominated by 10 to 15 players in the past, including Dole and Total Produce, Hunter added. The market has become more consolidated in the last five years, he said.
Dole was previously in talks with Greenyard, another European produce company. The same day Dole announced talks had fallen through, it also announced that it canceled a proposed $400 million initial public offering. Morgan Stanley, Bank of America Merrill Lynch and Deutsche Bank Securities Inc. had been announced as book-running managers for the offering.
In 2017, the company laid off 172 workers from its Oxnard strawberry operations.
Dole can trace its origins back to 1851 when Samuel Castle and Amos Cooke set up a trading company in Hawaii. In 1899 James Dole went to Hawaii. He later began the Hawaiian Pineapple Co. In 1932, Castle & Cooke acquired a 21 percent ownership of the company. They recognized James Dole’s popularity and began to put DOLE on their pineapple products. In 1961, Dole merged with Castle & Cooke. The company continued to expand. In 2003, Murdock took the company private.