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Dole Food’s $9.7bn Merger with Total Produce

By Zahra Malik, Devi Vanalia, Baliny Ganeshakumaran (University of Manchester) and Luca Delpippo, William Chang, Sanjana Ramaswamy, Jinghan Jennifer (University of St Andrews)

Photo: Engin Akyurt (Unsplash)


Overview of the deal

Acquirer: Dole Food

Target: Total Produce

Implied Equity Value: $1.8bn

Total Transaction Size: $9.7bn

Closed date: expected to close in late Q2 or early Q3 2021, subject to the approvals and conditions set.

Target advisor: Goldman Sachs International acted as exclusive financial advisor to Total Produce.

US fruit and vegetable producer Dole Food is to merge with Ireland-based Total Produce to create a new US-listed company Dole plc, which will be the world’s largest fresh produce company and will have an estimated revenue of $9.7 billion.

Total Produce have reached a deal with Castle & Cooke, a real estate company that owns a majority stake in Dole’s parent company Dole Holdings, to form Dole plc. As a condition of the transaction, Dole plc’s will list on a major U.S. exchange. Additionally, to raise $500m to $700m, Total Produce will delist from the London Stock Exchange and Euronext.

Total produce, said the transaction will deliver savings of $30m to $40m over the medium term, helping the company to reach a long-term target of 5% to 7% annual growth in earnings before tax, depreciation and amortisation.The transaction will simplify the existing structure between the two companies by unifying Dole and Total Produce under common ownership, with the objective of enabling full operational integration, realisation of synergies and value creation across the enlarged business.

“I am delighted with this Transaction, which combines two highly complementary premium businesses to create the global leader in fresh produce. I am confident the combined business will open new avenues of value creation for shareholders and pursue innovation in healthy nutrition for our customers worldwide.” - Carl McCann, chairman of Total Produce.

Company Details: (Acquirer - Dole Food)

Dole Food Company, Inc. is the largest producer of fruit and vegetables in the world. Dole markets fresh and frozen juices and fruits and owns a shopping line, Dole Ocean Cargo Express.

Founded in 1851, headquartered in O’ahu, Hawaii, USA

CEO: David H. Murdock

Number of employees: 36,000

Combined 2020 revenue of $9.7B and adjusted EBITDA of $379m.

Company Details: (Target - Total Produce)

Total Produce plc is one of the world’s largest fresh produce producers and providers. Total Produce grow, sourcing, import, package, market, and distribute over 300 lines of fresh produce.

Founded in 2006, headquartered in Dundalk, Ireland

CEO: Rory P. Byrne

Number of employees: 6,005

Market Cap: 810.492M (as of 24/2/2021)

EV: $1.16B

LTM Revenue: $3.79B


LTM EV/Revenue: .31 LTM EV/EBITDA: 9.02

Projections and Assumptions

Short-term consequences

Through the announcement of the deal, the shares of Total Produce rose by 18.6 per cent to £1.66. The merger will allow Dole to become the biggest fresh produce company globally with estimated combined 2020 revenue of about $9.7 billion, adjusted EBITDA of around $379m and total assets of about $4.5 billion. Dole plc has estimated that it will be approximately two times larger than its nearest competitor and will have unparalleled leadership in the produce supply chains. Dole plc intends to raise $500-700m in equity capital to strengthen and de-lever the combined balance sheet.

Once the transaction is completed, Total Produce shareholders will receive 82.5% of Dole plc. Shares and the C&C shareholders will receive 17.5% of Dole plc. Shares as they hold 55% interest in Dole’s parent company. Each case is based on the fully diluted outstanding shares immediately before the completion of the transaction.

Dole plc will be able to provide operating flexibility and product availability through the year through its global sourcing and shipping networks, utilizing its production capabilities and strong supplier relationships, expecting to deliver annualized synergies and cost savings at Dole of $15-20 million in the short term and $35 million over the medium term. Total Produce and Dole have jointly agreed to a strategic plan to expand the business years ahead.

Long-term Upsides

After the completion of the Transaction, Dole plc will be well-positioned to deliver sustainable long-term growth and utilise its increased size to drive market penetration and cross-selling. Dole will benefit from the Dole Brand's strength to further expand its product offering and pursue synergistic M&A in a fragmented and structurally growing industry.

The Transaction will simplify the existing structure between the two companies by unifying both companies' ownership to enable full operational integration, realisation of synergies, value creation and creating a new sales spread of 50-50 between North America and Europe. Dole plc will have a larger geographic presence with an extensive and diversified product portfolio, enhancing the business's overall financial resilience. Dole would have access to a broader range of consumer insight from around the world as they would have access to the existing infrastructure and distribution networks in North America and Europe's key markets.

Dole is predicted to become the largest global player with over 170 years of history in fresh produce. This strong foundation will allow the Dole to invest in development opportunities to achieve sustainable long-term growth. Both companies have been at the forefront of driving environmental and social changes across the industry. Dole plc will continue to pursue 2030 sustainability, economic and social and ethical targets. The sector is predicted to provide sustainable and highly resilient long-term growth due to increasing demand from more socially, environmentally, and ethically conscious consumers for healthier foods and innovative meal solutions produced more sustainably.

Risks and Uncertainties

Few risks surrounding the merger exist, with all parties involved agreeing that the merger is set to simplify capital structure and boost future opportunities for growth. The deal is, however, still subject to approval from shareholders and regulatory bodies. As Dole and Total Produce seek to integrate their trans-atlantic supply chains and establish more global operations, responsible production becomes a centerfold concern, given the need to scale factor inputs such as land, water, and energy to keep pace with the increased demand accompanying the merger. Furthermore, as ESG and Impact Investing principles become incorporated within corporate valuations and credit ratings (such as Moody’s Global Scale Credit ratings which include new ESG considerations), an enlarged and globally interconnected supply chain could be perceived as an additional risk factor, thereby negatively exerting downward pressures on it’s share price in the post-merger years. To combat this risk, Dole’s management will need to proactively acknowledge the sustainability challenges associated with the new business, and identify clear actions to mitigate unsustainable practices such as the elimination of food waste in operations and offsetting an increased carbon footprint. Further, rising concerns about the value of the dollar and a generally negative outlook for the global economy could impact the new company’s profitability and cut currently positive forecasts for the fresh fruit industry.

“The combined company will become the largest global player with over 170 years of history in fresh produce in both companies, a highly diversified portfolio, resilient earnings and a strong balance sheet that positions us well for accelerated growth” - Carl McCann, chairman of Total Produce.


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