Total Produce and Dole deal unlikely to bear fruit until end of year

Regulators will delay Total Produce's €260 million purchase of a stake in US rival Dole until close to the end of this year, according to the fruit distributor's chief executive, Rory Byrne.

Total Produce is buying 45 per cent of Dole, one of the biggest players in the US, for $300 million (€260 million) in a deal that competition watchdogs on both sides of the Atlantic must approve.

Mr Byrne told the Total Produce annual general meeting on Thursday that the European Commission’s competition directorate was taking longer than expected to give approval, with this now due towards the end of this year.

Total Produce originally expected the deal to be completed by mid-2018. Speaking after the meeting, Mr Byrne agreed that the European competition process was burdensome.

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“It’s a very onerous process in terms of the level of information that the EU requires in order to get comfortable with the outcome that we are trying to achieve,” he said.

First step

However, Mr Byrne added that the group’s advisers believe that the commission will ultimately approve the transaction, which could be the first step in creating a group with combined sales of €8 billion.

Total Produce has the option of buying Dole outright over five years, but the US group owes its banks around $1 billion, a debt that the Irish player does not want to take on.

Responding to questions from shareholders, chairman Carl McCann explained that Total Produce did not want to complete any takeover of Dole while it had such a large liability.

“It makes more sense to try to reduce that debt before we take it onto our own balance sheet,” he said.

Dole has revenues of around €3.9 billion. It is the biggest banana distributor in the US, selling 140 million boxes of the fruit there every year. It also sells pineapples, other fruit and vegetables, and has leading positions in most of its markets.

The company's business is biased towards North America, but it has a considerable position in Europe. Dole also has considerable assets, including farms, production plants and ships.

Boost earnings

The deal will boost earnings by “low double digits” and could save both operations an initial €35 million a year, Mr Byrne told the meeting.

Dole's chairman, 95-year-old David Murdock, will remain in that role, while Mr McCann will become its vice-chair.

After the meeting, Mr Byrne said that Dole would be Total Produce’s priority in coming months, but he did not rule out other purchases should opportunities come up.

Around 11 per cent of shareholders voted against the reappointment of chief financial officer Frank Davis, while 22 per cent either opposed or abstained on two votes relating to pre-emption rights. Most resolutions passed by more than 90 per cent.

Mr Byrne attributed the relatively high number of votes against some proposals to shareholder advisers. “We’re fully compliant with all the requirements of our listing, but some of these bodies apply higher standards,” he explained.