Responding to market rumors, Dole Food Co. Inc. (DOLE: Quote) said Wednesday that it is in advanced talks with Japanese trading company Itochu Corp. (ITOCY) for a possible sale of its Packaged Foods and Asia Fresh businesses. The move is part of the company's previously announced strategic review.
Dole Food, a distributor of fresh fruits and vegetables, added that it is continuing discussions with several other parties regarding sale of these and other assets. The company's shares gained more than 9 percent in the regular session.
In early May, while reporting its first-quarter financial results, Dole Food said its board has initiated a comprehensive strategic review of its businesses. The company added that it may consider include a full or partial separation of one or more of its businesses through a spin-off or other capital markets transaction as well as other alternatives that will enhance shareholder value.
The Nikkei business daily reported Wednesday that Itochu is poised to buy Dole Food's global canned-fruit and juice-beverage processing operations as well as its Asian fruit and vegetable business for an estimated $1.7 billion, or about 132 billion yen.
According to the Nikkei report, Itochu and Dole Food aim to reach a deal in September, targeting a closing of the deal during the current fiscal year.
Dole recorded fiscal 2011 sales of $7.22 billion, representing a 4.8 percent increase from the prior year. The processing operations and Asian fruit and vegetable business accounted for about 40 percent of the total sales.
Dole's processing business accounts for a roughly 60 percent market share in North America. The Asian fruit and vegetable segment consists of large farms in the Philippines and other countries, producing bananas and pineapples that account for 25 percent and 40 percent of the market share respectively in Asia. Dole is one of the world's largest producers of bananas and pineapples.
The Nikkei reported that Itochu will tap the sales network and processing facilities of China's Ting Hsin Group, in which it is an investor, and Japanese convenience store chain FamilyMart Co., as part of its efforts to boost sales of fruits, beverages and other products in Asia and other regions following the acquisition.
Itochu is also said to be exploring worldwide sales of fruit and vegetables grown in Japan under the Dole brand, a move that could pave the way for Japanese producers to sell their products abroad.
DOLE closed Wednesday's trading at $14.07, up $1.22 or 9.49 percent on a volume of 6.74 million shares. In after-hours, the stock further gained $0.36 or 2.56 percent to $14.43.
ITOCY closed Wednesday's trading at $20.32, down $0.17 or 0.83 percent on a volume of 60,830 shares.
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by RTT Staff Writer
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