Dole merger with Europe’s Total Produce to create global produce giant

Source: fooddive.com

Dive Brief:

  • Dole Food is merging with Ireland-based Total Produce in a deal that would create the world’s largest fresh produce company, the companies said in a statement. The merged company would be listed on a U.S. stock exchange and have global headquarters in Dublin, Ireland, with headquarters for the Americas in Charlotte, North Carolina.  
  • The new company called Dole Plc had an estimated combined 2020 revenue of about $9.7 billion, and would be twice as large as its nearest competitor, according to the statement. Rory Byrne, current CEO of Total Produce, will take on that role for Dole Plc. Johan Lindén, current CEO of Dole, will become COO. As part of the listing, Dole will raise between raise $500 million and $700 million that it will mainly use to reduce debt.
  • Dole has reportedly been looking to reenter the public markets after its billionaire owner David Murdock took the firm private in 2013. Fruit and vegetable demand has grown since then as consumers eat less sugar and fatty foods in favor of more fresh produce.

Dive Insight:

After years of reports that Dole would go public again, the fresh produce company appears to have finally succeeded. The combination with Total is as much about squeezing out the synergies from the fruit and vegetable giant as it is about simplifying a complex ownership structure. The Financial Times said Total, which has owned 45% of the U.S. operation since 2018, reached a deal with Castle & Cooke, a real estate company that owns a majority stake in Dole’s parent company, Dole Holdings.

With the structure soon to be ironed out, Dole hits the market at an ideal time when shoppers are consuming more produce — a shift that has been amplified during the pandemic. Sales of organic produce rose 14.2% in 2020, representing a $1 billion increase to $8.5 billion, according to the Organic Produce Network and Category Partners. Conventional produce sales rose 10.7%.

Dole noted the merged company would save millions of dollars from synergies due to greater supply chain efficiencies in land, vessels, salad manufacturing plants, cold storage facilities and packing houses. 

At the same time, the company said it will gain a deep portfolio with leadership positions in bananas, pineapples and fresh vegetables and an increased presence in growth categories such as soft fruit and avocados, while it expands its organics business. A diverse collection of produce could help buffer the company if there is a disruption in the supply of one item, or if consumer food preferences change.

The new Dole also will have a wider geographic reach with Total strong in Europe and Dole firmly entrenched in the Americas. The result, the merger agreement said, creates a “well-balanced geographic footprint” and allows Dole to collect greater customer insight from a broader range of consumers around the world. 

The new company is wisely keeping the Dole name, which has nearly become synonymous with the fresh category since it was founded in 1851. Dole, citing a 2020 IPSOS survey, said it had one of the most recognized brands for fresh fruit in the United States with 73% unaided consumer brand awareness.

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