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Total Produce merger with Dole Food Co. brings public listing to U.S.

DUBLIN–(BUSINESS WIRE)–Transaction Highlights:

Total Produce plc, Europe’s leading fresh produce company, Dole Food Company, Inc. BB #:124463, and affiliates of Castle & Cooke, Inc., which own a 55% interest in Dole’s parent company, are pleased to announce that they have entered into a binding transaction agreement to combine under a newly created, U.S. listed company.

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.

Under the terms of the Agreement, Total Produce shareholders will receive 82.5% of Dole plc shares and the C&C shareholders will receive 17.5% of Dole plc shares, in each case based on the fully diluted outstanding shares immediately prior to the completion of the Transaction.

Dole plc will be the global #1 in fresh produce with estimated combined 2020 revenue of approximately US$9.7 billion, Adjusted EBITDA of approximately US$379 million and total assets of approximately US$4.5 billion1.

Dole plc will be well positioned to deliver attractive long-term growth and utilise its increased size and network to drive market penetration and cross-selling. Dole plc will benefit from the strength of the Dole brand to further expand its product offering and pursue synergistic M&A in a fragmented and structurally growing industry.

Dole plc will have a balanced geographic presence with an extensive and diversified product portfolio, enhancing the overall financial resilience of the business.

Per the Agreement, Dole plc’s completion of an initial public offering and a listing on a major U.S. stock exchange is a condition for completion of the Transaction (the “IPO”). In connection with the Transaction, Dole plc intends to target raising US$500 to US$700 million in primary equity capital to strengthen and de-lever the combined balance sheet. Upon completion of the U.S. listing of Dole plc, Total Produce will cease to be listed on Euronext Dublin and the London Stock Exchange.

Supported by the delivery of synergies and improved trading characteristics in the U.S. public market, successful completion of the Transaction is expected to create significant value equivalent to at least €2.15 per Total Produce share (a +46% increase on yesterday’s closing share price2) based on achieving the minimum agreed valuation of US$215 million (as a condition set forth in the Agreement) for the 17.5% stake in Dole plc owned by the C&C shareholders on a fully diluted basis immediately prior to completion of the Transaction3.

Dole plc, operating under the Dole brand, will be incorporated in Ireland, with its Global Headquarters in Dublin, Ireland. Its headquarters for the Americas will be in Charlotte, North Carolina.

The highly regarded management teams of Total Produce and Dole, with combined experience of over 150 years in the fresh produce sector, will continue to operate the combined business.

The Transaction is subject to approval by Total Produce shareholders, regulatory approvals, market conditions and customary conditions4.
Commenting on today’s announcement, Carl McCann, Chairman of Total Produce, said:

“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.

“Our intention to list the new company in the United States marks an exciting next step for Dole plc. 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. We look forward to beginning this next chapter and providing increased opportunity for our shareholders, dedicated employees, customers, suppliers and partners.”

Rationale for the Transaction:

Simplifies the existing relationship structure between the two companies by unifying Dole and Total Produce under common ownership:

The combination will allow for full operational integration, realisation of synergies and value creation across the combined business.
Building on the successful existing relationship between the two companies, the new structure facilitates strategic alignment and operational agility across the whole organization.

Creates potential for significant revenue synergies and cost efficiencies and a platform to pursue growth from a broader set of available commercial opportunities:

Dole plc expects to deliver Adjusted EBITDA synergies of between US$30 million and US$40 million over the medium term, largely through revenue expansion and cost optimization opportunities across products, regions, sourcing and supply chain.

As a result of the company’s increased footprint and brand strength, it expects to deepen market penetration, expand into attractive product categories, utilise a larger network of relationships across customers, distributors, suppliers and shippers, and enhance its ability to capitalise on an enlarged opportunity set in the produce industry.

Strengthens the combined balance sheet, unlocking future organic and development opportunities:

Per the Agreement, Dole plc intends to target a primary equity capital raise of between US$500 and US$700 million which would significantly de-lever the combined balance sheet with a target of approximately 3.0x estimated combined net debt / Adjusted EBITDA giving effect to the Transaction5.

This strong foundation will allow the company to invest in organic and development opportunities and position it to achieve sustainable long-term growth.

Provides significant value to Total Produce shareholders from Transaction terms, underpinned by the delivery of synergies and improved trading characteristics in a U.S. public market context:

The Transaction is expected to create significant value equivalent to at least €2.15 per Total Produce share (a +46% increase on yesterday’s closing share price)6 based on an agreed floor valuation of US$215 million (as a condition set forth in the Agreement) for the 17.5% stake in Dole plc owned by the C&C shareholders on a fully diluted basis immediately prior to the completion of the Transaction7.

In addition, the Board of Directors of Total Produce believes that there is significant potential for further value creation, assuming Dole plc’s IPO valuation is comparable with relevant industry peers in a U.S. public market context.

Dole plc Business Profile and Growth Opportunity:

Creates the premier global #1 in fresh produce, with an unrivalled footprint and leadership position across attractive categories:

With estimated combined 2020 revenue of approximately US$9.7 billion, Dole plc estimates it will be approximately two times larger than its nearest competitor. It will have unparalleled leadership in the produce supply chains and end markets.

Dole plc will have greater specialisation across products, forge deeper relationships with customers and suppliers and avail itself of more operational efficiencies to drive down costs.

The company will have a well-balanced portfolio with strong leadership positions in stable categories such as bananas, pineapples and fresh vegetables, combined with increased size and presence in attractive growth categories such as soft fruit and avocados, while building its currently strong presence in organic produce.

Enhances overall resilience of the business with complementary core capabilities and highly diversified presence across categories and geographies:

The combined product portfolio of Dole plc is the most diversified in the produce industry.

Dole’s global cultivation and iconic Dole brand, a strategic asset which Dole plc will continue to develop, complement Total Produce’s business-to-business brands and on-the-ground capabilities in category management and innovation, delivered from over 160 facilities.

Total Produce’s strong presence across the European continent complements Dole’s deep heritage in the Americas, resulting in a well-balanced geographic footprint and significantly enhanced global customer insights.

Unlocks potential across the value chain, combining Dole’s vertically integrated business model and asset base with Total Produce’s flexible and agile structure:

The company will benefit from greater supply chain efficiencies, utilising a highly valuable, strategic estimated combined 2020 total asset base of approximately US$4.5 billion, including significant owned land, vessels, salad manufacturing plants, cold storage facilities and packing houses.

Dole plc’s global sourcing and shipping networks will provide operating flexibility and product availability throughout the year, utilising own production capabilities and strong supplier relationships.

As a result of the company’s expanded sourcing and distribution network, Dole plc will have enhanced capabilities to create value from cultivation to market, strengthening and enhancing its partnership with customers.

Benefits from consumer trends towards healthier and more natural foods in a sector well-aligned with ESG themes:

The fresh produce category provides highly nutritious products and has the lowest ecological, water and carbon footprints compared to other food categories8.

The sector is expected to provide sustainable and highly resilient long-term growth due to increasing demand from environmentally and socially conscious consumers for healthier foods and innovative meal solutions produced more sustainably.

Both companies have been at the forefront of driving positive environmental and social change across the industry and Dole plc will continue to pursue ambitious 2030 sustainability, economic and social and ethical targets.

Results in a resilient financial profile, with enhanced long-term growth prospects and strong cash flows:

The Board of Directors of Total Produce believes the company will have long-term organic growth potential of 2%-3% p.a., enhanced further by development opportunities.

Dole plc’s earnings stability will be supported by increased diversification and an integrated supply chain, with a long-term target to achieve 5%-7% Adjusted EBITDA growth p.a., supported by synergies, efficiencies and development opportunities.
The company will benefit from strong cash flow generation to fund an attractive dividend pay-out ratio in line with Total Produce’s historical pay-out ratio.

Significant Operating Synergies from the Transaction

The Transaction is expected to generate significant EBITDA synergies of between US$30 million and US$40 million over the medium term from revenue expansion and cost optimization opportunities across products, regions, sourcing and the supply chain.

Product synergies will come from accelerated strategic development of high growth products such as avocados and soft fruit, the promotion of the Dole brand with the Total Produce brands, and the utilisation of existing infrastructure and distribution networks in the key markets of North America and Europe.

Revenue enhancement will come from increased collaboration between Total Produce and Dole in regions such as the UK, France and Spain and further development of the service provision model with key retail customers.

Sourcing benefits will come from collaborative sourcing from key production regions in Chile and South Africa and further coordination of the group’s extensive procurement and supply chain network.

Supply chain benefits include increased collaboration across inland freight and logistics in North America, further development of third-party logistics offerings, as well as a strategic approach to the coordination of global sea freight management.

The synergies described above are beyond and incremental to the collaboration, efficiency and portfolio management initiatives which the two organizations have undertaken since Total Produce’s initial 45% investment in Dole Holdings, which was completed on 31 July 20189. On 29 January 2019, Dole successfully completed the sale of its European salads business for approximately US$50 million.

In addition, in an effort to drive cost savings and better align time zones, Dole moved its corporate headquarters from California to North Carolina in 2019. From a commercial perspective, the two organisations have made meaningful progress on efforts to cross-sell fruits and vegetables in the two companies’ respective home markets. In addition, the two organizations have advanced steps to consolidate logistics and procurement functions in select markets such as South Africa, as well as to enhance Dole’s sales function in Europe.

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