Dole shares drop on debut after IPO raises lower-than-expected $400m

Company forced to cut price range as it struggled to compete for investor attention

Total Produce bought a 45 per cent stake in Dole Foods in 2018 and agreed in February to an outright merger between both companies to form Dole

Total Produce bought a 45 per cent stake in Dole Foods in 2018 and agreed in February to an outright merger between both companies to form Dole

 

Shares in Dole plc, a company created to complete the merger between Dublin-based Total Produce and US rival Dole Foods to form the world’s largest fruit and vegetable supply business, dropped as they floated in New York on Friday after the company raised a lower-than-expected $400 million (€336.7 million) from its initial public offering (IPO).

The company originally set out last week to raise about $500 million in the IPO, based off the mid-point of a $20-$23 price range at which its investment bankers had initially sought to sell the new shares.

However, Dole was forced to cut the price range to $16-$17 earlier this week as the company struggled to compete for investor attention with a flurry of US IPOs and as sector followers mulled recent share price declines by its main peers, Belgium’s Greenyard and Florida-headquartered Fresh Del Monte.

While Dole upped the number of shares on offer on Wednesday to stick to its target to raise about $500 million, the company revealed on Friday morning that only 25 million of the planned 30.3 million new shares were sold and that the IPO was priced at the bottom of the lowered range, at $16.

Dole’s shares slid by as much as 8.4 per cent to $14.68 as they debut on the market on Friday morning in New York.

Goldman Sachs, Deutsche Bank Securities and Davy acted as lead book-running managers for the offering. BofA Securities, BMO Capital Markets and Rabo Securities acted as book-running managers. Stephens Inc was co-manager for the offering.

Total Produce bought a 45 per cent stake in Dole Foods in 2018 and agreed in February to an outright merger between both companies to form Dole. Dole is being led by Total Produce’s previous top managers, executive chairman Carl McCann and chief executive Rory Byrne, out of its headquarters in Dublin.

Total Produce’s legacy shareholders own the majority of Dole.

A flurry in US IPOs has seen companies raise a record $89 billion between the start of 2021 and the end of last week, up more than 230 per cent on the same period last year, according to figures from investment bank Renaissance Capital. The total level of funds raised through IPOs this year is expected to surpass the all-time high of $97 billion raised in 2000 amid the dot-com boom, it estimates.