The impact of the sale of Dole’s worldwide packaged foods and Asian fresh produce businesses to Itochu, announced last week, is unlikely to be felt on the ground for a number of months, but the separation could yield quick benefits from the reduction of the company’s debt burden.
Dole’s debt of US$1.6bn will be reduced to just US$250m, a much more manageable figure for the company’s remaining divisions. Dole’s worldwide packaged foods and Asian fresh produce divisions under Itochu’s ownership will be free of that debt altogether.
“The company will be operating without that debt, so business opportunities will be much more freely available. Basically, the difficulties with obtaining capex `capital expenditure` have been resolved. We see some wonderful opportunities,” Dole Asia’s New Zealand representative Steve Barton told Asiafruit.
Barton explained Dole Asia would be reformed into a separate entity, which would retain the Dole moniker in some capacity as well as managing the Dole brand in the region.
“It’s business as usual and it’s operating very well, so in my division I don’t see any need for immediate issues,” said Barton. “The more important issues will be handled first, like the accounting or management changes.”
Those accounting changes may not be completed until early next year, Barton detailed.
Dole’s packaged food and Asian fresh produce businesses have been two of the company’s most profitable divisions, with a combined revenue of about US$2.5bn and EBITDA adjusted earnings in 2011 of US$190m.
“Asia and packaged food are the most profitable divisions, so it was the most practical `to sell those`,” Barton explained, adding the Itochu purchase was an exciting time for the business. “They’ve bought a very good company.”
Barton predicted the Asian division would retain a working relationship with Dole’s remaining operations globally, considering they both had similar interests and a shared brand.
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