TIDMTOT
RNS Number : 3924P
Total Produce Plc
17 February 2021
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014.
17 February 2021
TOTAL PRODUCE TO COMBINE WITH DOLE FOOD COMPANY AND BECOME
PUBLICLY LISTED IN THE U.S.
Transaction Highlights:
-- Total Produce plc ("Total Produce"), Europe's leading fresh
produce company, Dole Food Company, Inc. ("Dole"), and affiliates
of Castle & Cooke, Inc. (the "C&C shareholders"), which own
a 55% interest in Dole's parent company ("Dole Holdings")
(together, the "Parties"), are pleased to announce that they have
entered into a binding transaction agreement (the "Agreement") to
combine under a newly created, U.S. listed company ("Dole plc")
(the "Transaction").
-- 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 billion(1) .
-- 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 EUR2.15 per Total Produce share (a +46% increase on
yesterday's closing share price(2) ) 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 Transaction (3) .
[1] Preliminary, estimated combined financials calculated by
adding estimated 2020 financial information for Total Produce
(includes share of income from JVs and Associates) and estimated
2020 financial information for Dole, on the basis of U.S. GAAP
management accounts. These figures are presented for illustrative
purposes, are unaudited, are not prepared on a pro forma basis and
do not reflect any pro forma adjustments. These figures are not
indicative of what results would have been had the companies been
operated as Dole plc. See sections 'Financial Information on Dole
plc' and 'Important Notice' for further detail.
2 Total Produce Euronext closing share price as of 16 February
2021.
(3) See section 'Significant Value Creation Potential' for
further detail on the calculation.
-- 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
conditions(1) .
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."
This summary should be read in conjunction with the full text of
this Announcement.
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 Transaction2.
-- This strong foundation will allow the company to invest in
organic and development opportunities and position it to achieve
sustainable long-term growth.
[1] See section 'Transaction Terms, Structure and Timing' for
further detail on the terms of the Agreement.
(2) Based on US$600 million primary equity capital raise, the
midpoint of the targeted range of US$500 to US$700 million, as per
the Agreement.
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 EUR2.15 per Total Produce share ( a +46%
increase on yesterday's closing share price)(1) 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 Transaction 2 .
-- 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 categories3.
[1] Total Produce Euronext closing share price as of 16 February
2021.
2 See section 'Significant Value Creation Potential' for further
detail on the calculation.
3 Source: Euromonitor, Barilla Center for Food & Nutrition
"Double Pyramid", Vox 2020.
-- 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 o f 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 s trategic
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 20181. 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.
Significant Value Creation Potential
The terms of the Transaction are expected to provide significant
value to Total Produce shareholders, supported by synergies and the
improved trading characteristics in the U.S. public market. At the
Valuation Floor, the terms of the Transaction would imply a value
of EUR2.15 per Total Produce share ( a +46% increase on yesterday's
closing share price) 2 .
1 See section 'Initial Investment in Dole on 31 July 2018'.
2 Total Produce Euronext closing share price as of 16 February
2021.
The Board of Directors of Total Produce believes there is
significant further upside to the value creation potential,
assuming that Dole plc can achieve a public trading valuation in
line with relevant industry peers.
The table below sets out the calculation of value delivered per
Total Produce share based on the terms of the agreed Valuation
Floor as set forth in the Agreement.
Floor Value of the C&C Shareholders' Interest in
Dole plc 1 $ 215m
-------------------------------------------------------------- --------
Ownership of the C&C Shareholders in Dole plc (Pre
Primary Equity Capital Raise)(1) 17.5%
============================================================== ========
Implied Dole plc Equity Value at IPO (Pre Primary $ 1.2bn
Equity Capital Raise)
============================================================== ========
Memo: Implied Dole plc Equity Value at IPO (Post Primary $ 1.8bn
Equity Capital Raise)2 (,3)
============================================================== ========
Dole plc Shares Outstanding at IPO (Pre Share Consolidation)4 473.5m
============================================================== ========
Implied Dole plc Price per Share (Pre Share Consolidation) $ 2.60
============================================================== ========
EUR/USD Exchange Rate5 1.21
============================================================== ========
Implied Dole plc Price per Share (Pre Share Consolidation) EUR 2.15
============================================================== ========
Dole plc Net Debt at IPO (Pre Primary Equity Capital $ 1.4bn
Raise)(3,6)
============================================================== ========
Memo: Dole plc Target Net Debt at IPO (Post Primary $ 0.9bn
Equity Capital Raise)(2,7)
============================================================== ========
Dole plc Enterprise Value at IPO (Post Primary Equity $ 2.9bn
Capital Raise)8
============================================================== ========
Implied EV / 2020 Adjusted EBITDA Multiple (Pre Synergies) 7.6x
============================================================== ========
Implied EV / 2020 Adjusted EBITDA Multiple (Post
Synergies) 9 6.9x
-------------------------------------------------------------- --------
The Valuation Floor implies a valuation of Dole plc of
approximately 7.6x 2020 EV / Adjusted EBITDA (6.9x including
synergies), which the Board of Directors of Total Produce believes
is meaningfully below the valuation levels observed in public
markets for relevant comparable companies.
Transaction Terms, Structure and Timing:
Under the terms of the Agreement, Total Produce and Dole will
combine under Dole plc, a newly created and Irish incorporated
company which will concurrently seek a listing on a major U.S.
stock exchange. Upon completion of the Transaction, existing Total
Produce listings on the Euronext Dublin and the London Stock
Exchange will be discontinued (the "Delistings").
Shares in Total Produce will be exchanged for shares in Dole plc
through a scheme of arrangement at a fixed exchange ratio, whereby
Total Produce shareholders will receive shares in Dole plc for
shares held in Total Produce, representing 82.5% of Dole plc shares
outstanding on a fully diluted basis immediately prior to the
completion of the Transaction. Simultaneously, Dole Holdings will
combine with a subsidiary of Dole plc, whereby the C&C
shareholders (the owners of the 55% interest in Dole Holdings not
currently owned by Total Produce) will receive shares in Dole plc
equivalent to 17.5% of Dole plc shares outstanding on a fully
diluted basis immediately prior to the completion of the
Transaction.
[1] Per the Agreement, the Transaction is subject to the IPO
achieving a price per Dole plc share such that the 17.5% of Dole
plc shares to be held by the C&C shareholders on a fully
diluted basis immediately prior to the IPO have an aggregate value
of at least US$215 million. See section 'Transaction Terms,
Structure and Timing' for further details.
2 Implied Dole plc Equity Value at IPO assumes primary equity
capital raise of US$600 million, the midpoint of the targeted range
of US$500 to US$700 million, as per the Agreement.
(3) Total Produce balance sheet figures are converted at
year-end EUR/USD exchange rate of 1.23.
4 Dole plc Shares Outstanding at IPO is based on current Total
Produce fully diluted shares outstanding of 390.6 million assuming
Total Produce Euronext share price of EUR2.15.
5 EUR/USD exchange rate as of 16 February 2021.
(6) Dole plc estimated combined net debt includes Total Produce
net debt of EUR0.1 billion and Dole net debt of $1.3 billion as of
31 December 2020.
(7) Includes transaction fees and expenses.
8 Dole plc Enterprise Value at IPO accounts for proportionate
net cash from joint ventures and associates and minority interests
as of 31 December 2020.
9 Implied EV / 2020 Adjusted EBITDA (Post Synergies) assumes
medium term synergies of US$35 million, the midpoint of the
estimated range of US$30 million and $40 million.
As a result of the merger and related transactions, Dole will
become an indirect, wholly owned subsidiary of Dole plc.
Per the terms of the Agreement, immediately following or
substantially concurrently with completion of the business
combination transactions, Dole plc is required to complete an IPO
and a related listing on a major U.S. stock exchange to be
determined. In connection with the Transaction, Dole plc intends to
raise equity capital with a target amount of between US$500 and
US$700 million. Immediately following the Transaction, existing
Total Produce shareholders are expected to own approximately 55% of
Dole plc on a fully diluted basis and the C&C shareholders are
expected to own approximately 10% of Dole plc on a fully diluted
basis, with the remainder to be held by investors participating in
the equity capital raise1.
With respect to the IPO, the Parties have agreed to the
following conditions with the objective to support and protect the
value proposition of the Transaction to existing Total Produce
shareholders and the C&C shareholders as well as enable the
C&C shareholders to realise liquidity for a portion of their
holdings in the Transaction:
-- The Transaction is subject to the IPO achieving a price per
Dole plc share such that the 17.5% of Dole plc shares to be held by
the C&C shareholders on a fully diluted basis immediately prior
to the IPO have an aggregate value of at least US$215 million (the
"Valuation Floor"). The Valuation Floor implies a valuation of Dole
plc of approximately 7.6x 2020 EV / Adjusted EBITDA (6.9x post
including synergies2), which the Board of Directors of Total
Produce believes is meaningfully below the valuation levels
observed in public markets for relevant comparable companies3.
-- Further, the Transaction is subject to the C&C
shareholders achieving net proceeds of at least US$50 million in
the sale of shares on a secondary basis in conjunction with the IPO
(the "Minimum Secondary"). Per the Agreement, further sales of Dole
plc shares by the C&C shareholders post completion of the
Transaction will be subject to customary lock-up provisions.
The Valuation Floor and Minimum Secondary conditions can be
waived by Total Produce and the C&C shareholders by mutual
consent at any time prior to completion.
Per the Agreement, the Parties also agreed that upon completion
of the Transaction, the capital amount of US$25 million due under
the promissory note issued by the C&C shareholders to Dole
Holdings shall be deemed satisfied in exchange for equivalent
value. The Parties further agreed that Total Produce and the
C&C shareholders shall, subject to certain conditions, release
each other from existing and future indemnity claims arising from
the Initial Transaction.
Completion of the IPO and the business combination transactions
to form Dole plc will occur simultaneously and inter-conditionally,
subject to market conditions. The scheme of arrangement with
respect to the exchange of shares in Total Produce for shares in
Dole plc will be subject to the approval of Total Produce
shareholders and the approval of the High Court of Ireland. The
Delistings will be subject to the approval of Total Produce
shareholders. Total Produce shareholders will be asked to vote in
favour of the proposed scheme of arrangement, the Delistings and
certain related matters (the "Resolutions") at an extraordinary
general meeting of shareholders to be scheduled in due course. The
Transaction also remains subject to the Valuation Floor, the
Minimum Secondary and regulatory approvals in a limited number of
jurisdictions and other conditions and approvals customary to a
transaction of this nature. Subject to all other conditions having
been satisfied, completion of the Transaction will close at such
time as the Board of Directors of Total Produce may determine,
provided that if completion has not occurred by 15 November 2021,
either Total Produce or Dole may terminate the Agreement on the
terms set forth therein.
Should the Transaction not be completed for any reason, the
terms of the Initial Transaction (as defined below) will remain in
place and Total Produce will continue to be listed on Euronext
Dublin and the London Stock Exchange.
[1] Assumes the anticipated secondary sell-down of US$50 million
of Dole plc shares by C&C shareholders in connection with the
Dole plc primary equity capital raise. Further assumes Dole plc
valued at the agreed Valuation Floor as set forth in the
Agreement.
2 Assumes medium term synergies of US$35 million, the midpoint
of the estimated range of US$30 million and $40 million.
3 See section 'Significant Value Creation Potential' for further
detail on the calculation.
Initial Investment in Dole Holdings on 31 July 2018 (the
"Initial Transaction")
On 1 February 2018, Total Produce announced the acquisition of a
45% stake in Dole Holdings from the C&C shareholders for cash
consideration of US$300 million (the "First Tranche"), which was
completed on 31 July 2018. From and after the closing of the First
Tranche, Total Produce has had the right, but not the obligation,
to acquire (in any one or more tranches of 1%), at any time and
from time to time, up to an additional 6% of the equity interests
in Dole Holdings (the "Second Tranche").
From and after 31 July 2020, Total Produce has had the right,
but not the obligation, to acquire the balance of the equity
interests in Dole Holdings (the "Third Tranche"), whereby the
consideration for the Third Tranche is to be calculated based on 9x
the three-year average historical Dole Adjusted EBITDA, less net
debt, subject to a cap and a floor price.
Effective as of 31 July 2023, in the event that Total Produce
has not exercised its right to acquire the Third Tranche, the
C&C shareholders are permitted to cause a process to market and
sell Dole Holdings or all or substantially all of its assets.
If completion of the Transaction fails to occur for any reason,
Total Produce will continue to be entitled to acquire the Second
Tranche and the Third Tranche on the terms set forth above.
Timing and Next Steps
An Extraordinary General Meeting will be convened in due course
for Total Produce shareholders to consider and, if thought fit,
approve the Resolutions. The Resolutions will be set out in a
circular, which is expected to be published in April 2021. Approval
from the High Court of Ireland will be sought shortly after
receiving the required approvals from Total Produce
shareholders.
The Transaction is expected to close in late Q2 or early Q3
2021, subject to the approvals and conditions set out above.
Management and Governance
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, and Dole
plc will continue to service customers with high quality fresh
products as both Total Produce and Dole have done heretofore.
Upon completion of the Transaction, Carl McCann, current
Chairman of Total Produce, will assume the role of Chairman of Dole
plc. Rory Byrne, current Chief Executive of Total Produce, will
become Chief Executive of Dole plc. Johan Lindén, current Chief
Executive of Dole, will become Chief Operating Officer of Dole plc.
Frank Davis, current Finance Director of Total Produce, will become
Chief Financial Officer of Dole plc. Johan Malmqvist, current Chief
Financial Officer of Dole, will become Executive-VP Finance of Dole
plc. Jared Gale, current General Counsel of Dole, will become Chief
Legal Officer of Dole plc. Jacinta Devine, current Company
Secretary of Total Produce, will become Company Secretary of Dole
plc.
The combined company, operating under the Dole brand, will be
incorporated in Ireland, with its Global Headquarters in Dublin,
Ireland, and its Headquarters for the Americas in Charlotte, North
Carolina.
The composition of the Board of Directors of Dole plc, which has
yet to be determined, will be in line with SEC rules and corporate
governance standards. The Board of Directors of Dole plc will be
determined by Total Produce and be formed with a commitment to
diversity of backgrounds and experiences. The C&C shareholders
will not appoint any representatives to the Board of Directors of
Dole plc.
Following the Transaction, Dole plc will report under U.S. GAAP
and publish financial statements on a quarterly basis in line with
U.S. publicly listed companies.
Balance Sheet and Debt Financing
It is intended that Dole plc will target a primary equity
capital raise of between US$500 and US$700 million, which would
significantly de-lever the combined balance sheet to a target of
approximately 3.0x estimated combined net debt / Adjusted EBITDA
giving effect to the Transaction(1) . This would result in a
long-term sustainable capitalisation of Dole plc and create a
strong foundation to invest in organic and development
opportunities in the future in a fragmented and structurally
growing market.
Total Produce has secured committed debt facilities (with a term
of 5-7 years) to backstop and refinance existing Total Produce and
Dole debt facilities upon completion of the Transaction, with the
exception of the Dole vessel financing and certain other group
bilateral facilities which will remain post completion. Overall,
this is expected to provide for a stronger balance sheet, which is
expected to enhance Dole plc 's credit profile and lower its
average cost of capital going forward.
Illustrative Financial Information on Dole plc 2
Dole plc's financial profile is characterized by a high degree
of resilience due to its diversified and robust business model. The
combined company has shown a stable growth profile in the
historical period, both on a revenue and Adjusted EBITDA basis.
Over the period from 2018 to 2020, revenues have grown at a rate of
approximately 1% p.a. at both Total Produce and Dole. Significant
margin expansion has translated such growth into Adjusted EBITDA
growth of approximately 8.2% p.a. over the same period. In 2020,
the combined business has demonstrated such resilience through
COVID-19 when it continued to deliver stable performance. Dole
plc's revenues grew 3.6% and Adjusted EBITDA grew 3.9% on a
combined basis in 2020.
Going forward, Dole plc will benefit from its enlarged footprint
and enhanced capabilities to drive future topline expansion. The
Board of Directors of Total Produce believes that the company will
have a long-term organic growth potential of 2%-3% p.a., further
enhanced by development opportunities. Dole plc's earnings
stability will be supported by enhanced diversification and an
integrated supply chain, with a long-term potential 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 and limited capex
requirements to fund an attractive dividend pay-out ratio in line
with or above Total Produce's historical pay-out ratio.
[1] Based on US$600 million in primary equity capital raise, the
midpoint of the targeted range of US$500 to US$700 million, as per
the Agreement.
2 Preliminary, estimated combined financials calculated by
adding estimated 2020 financial information for Total Produce
(includes share of income from JVs and Associates) and estimated
2020 financial information for Dole, on the basis of U.S. GAAP
management accounts. These figures are presented for illustrative
purposes, are unaudited, are not prepared on a pro forma basis and
do not reflect any pro forma adjustments. These figures are not
indicative of what results would have been had the companies been
operated as Dole plc. Total Produce financials converted to USD at
EUR/USD exchange rate of 1.14, 1.12, 1.18 for 2020, 2019 and 2018,
respectively. See section 'Important Notice'.
Illustrative Combined Total Produce & Dole U.S. GAAP
Financials:
US$ in millions, unless otherwise 18 -
stated FY 2020 FY 2019 FY 2018 20 CAGR
------------------------------------ --------- --------- --------- --------
Total Produce Revenue (EUR) EUR 4,437 EUR 4,363 EUR 4,354 1.0%
==================================== ========= ========= ========= ========
Total Produce Revenue (US$) $ 5,051 $ 4,875 $ 5,130
==================================== ========= ========= ========= ========
Dole Revenue $ 4,672 $ 4,516 $ 4,567 1.1%
==================================== ========= ========= ========= ========
Pro Forma Revenue $ 9,723 $ 9,391 $ 9,697 0.1 %
==================================== ========= ========= ========= ========
Growth (%) 3.5 % (3.2)%
==================================== ========= ========= ========= ========
Total Produce Adjusted EBITDA
(EUR) EUR 115 EUR 102 EUR 111
==================================== ========= ========= =========
Total Produce Adjusted EBITDA $ 131 $ 114 $ 131
==================================== ========= ========= =========
Dole Adjusted EBITDA $ 248 $ 241 $ 193
==================================== ========= ========= ========= ========
Adjusted EBITDA(1) $ 379 $ 355 $ 323 8.2 %
==================================== ========= ========= ========= ========
Adjusted EBITDA Margin (%) 3.9 % 3.8 % 3.3 %
==================================== ========= ========= ========= ========
Total Produce Adjusted EBIT (EUR) EUR 89 EUR 77 EUR 88
==================================== ========= ========= =========
Total Produce Adjusted EBIT $ 101 $ 86 $ 104
==================================== ========= ========= =========
Dole Adjusted EBIT $ 159 $ 152 $ 102
==================================== ========= ========= ========= ========
12.4
Adjusted EBIT(1) $ 260 $ 238 $ 206 %
==================================== ========= ========= ========= --------
Adjusted EBIT Margin (%) 2.7 % 2.5 % 2.1 %
==================================== ========= ========= =========
Total Produce Capital Expenditure
(EUR) EUR 20 EUR 24 EUR 30
==================================== ========= ========= =========
Total Produce Capital Expenditure $ 23 $ 27 $ 36
==================================== ========= ========= =========
Dole Capital Expenditure $ 91 $ 84 $ 75
==================================== ========= ========= =========
Capital Expenditure $ 114 $ 111 $ 111
==================================== ========= ========= =========
Capital Expenditure as % of Revenue 1.2 % 1.2 % 1.1 %
------------------------------------ --------- --------- ---------
Reconciliation of Total Produce Standalone IFRS EBITA to U.S.
GAAP EBITDA:
EUR in millions, unless otherwise stated FY 2020 FY 2019 FY 2018
----------------------------------------- ------- ------- -------
IFRS Adjusted EBITA 1 EUR 91 EUR 82 EUR 88
========================================= ======= ======= =======
Depreciation EUR 25 EUR 24 EUR 23
========================================= ======= ======= =======
IFRS Adjusted EBITDA1 EUR 116 EUR 106 EUR 110
========================================= ======= ======= =======
Adjustments on U.S. GAAP Transition
========================================= ======= ======= =======
Employee Benefits EUR 2 EUR 1 EUR 1
========================================= ======= ======= =======
Leasing EUR (3) EUR (3) EUR 0
========================================= ======= ======= =======
Others EUR (0) EUR (1) EUR (0)
========================================= ======= ======= =======
U.S. GAAP - Adjusted EBITDA EUR 115 EUR 102 EUR 111
========================================= ======= ======= =======
Exchange Rate 1.14 1.12 1.18
========================================= ======= ======= =======
U.S. GAAP - Adjusted EBITDA (US$) $ 131 $ 114 $ 131
----------------------------------------- ------- ------- -------
(1) See section 'Total Produce's Alternative Performance
Measures ("APM's") and Dole's Non-GAAP Financial Measures' for
Adjusted EBIT and Adjusted EBITDA definitions for Total Produce and
Dole.
Background on Total Produce
Total Produce is today one of the world's largest fresh produce
producers and providers. Operating out of 26 countries (30
inclusive of Dole) while serving many more, Total Produce's reach
extends across the globe incorporating over 160 facilities (over
250 facilities inclusive of Dole) including farms, manufacturing
and ripening facilities and cold storage warehousing, packhouses
and distribution hubs. Growing, sourcing, importing, packaging,
marketing and distributing over 300 lines of fresh produce, Total
Produce's range extends from the more familiar to the truly exotic
and includes extensive organic and value-added fresh cut ranges.
Serving the retail, wholesale and foodservice sectors, Total
Produce is a complete fresh produce solution provider - offering a
comprehensive menu of services to its customers ranging from
service provision to complete category management. Total Produce
has a demonstrable track record at forging constructive and
enduring partnerships across Europe, North America and other
regions. Its evolution into a global industry leader has been most
notable for its sustained, strategic growth and consistent
profitability.
Total Produce's business model sets it apart through its
capacity to deliver the best of both worlds; the collective
resources of a global multi-national with entrepreneurial local
management. This allows Total Produce to present a compelling
proposition to the marketplace. Combining Total Produce's reach
with local experience and expertise, it uniquely positions Total
Produce to provide to its customers the service levels associated
with the very best local suppliers, and to consumers premium
locally grown produce from passionate local growers alongside the
finest fresh produce from the most accomplished producers across
the globe.
On 1 February 2018, Total Produce announced the acquisition of a
45% stake in Dole Holdings from the C&C shareholders for cash
consideration of US$300 million, which was completed on 31 July
2018. This initial step laid the groundwork for a collaborative
partnership between Total Produce and Dole. The Transaction
announced today is a logical next step to bring the companies
together and unify them under one simplified structure, which the
Board of Directors of Total Produce believes will serve to unlock
the potential that exists for the enlarged business going
forward.
Background on Dole
Founded in 1851, Dole Food Company, Inc. is one of the world's
leading producers, marketers and distributors of fresh fruit and
fresh vegetables. Dole provides retail, wholesale and foodservice
customers around the world with a diverse portfolio of the finest,
high-quality fresh fruit and vegetable products bearing the DOLE
brand and other brands. Dole's most significant products hold
leading market share positions in their respective markets. Dole is
one of the world's largest producers of bananas and pineapples, and
a leader in other fresh fruit, value-added and fresh-packed
vegetables, and soft fruit. Dole sells and distributes its fruit
and vegetable products throughout its network in North America,
Europe, Latin America, South Africa and Dubai.
The DOLE brand is one of the most recognized brands for fresh
fruit in the United States, as evidenced by Dole's 73% unaided
consumer brand awareness - 42% higher than that of its closest
competitor, according to a survey conducted in 2020 by major global
research company IPSOS. In a recent survey conducted by Morning
Consult, DOLE ranked among the 10 fastest growing brands among
millennials.
Dole has built an integrated supply chain and operating platform
by owning farmland, manufacturing plants, pack houses, ships,
containers and port and research facilities. Dole owns and operates
approximately 105,000 acres of farms and other land holdings around
the world, including approximately 5,000 acres of actively marketed
idle land for sale in Oahu, Hawaii. In addition, Dole owns a fleet
of 15 refrigerated ships, 13 of which are dedicated to its
operations, operates approximately 16,400 refrigerated containers
and utilises four salad manufacturing plants.
At present, the C&C shareholders own a combined 55% interest
in Dole Holdings and Total Produce owns a 45% interest in Dole
Holdings, which it acquired from the C&C shareholders on 31
July 2018.
Advisors
Goldman Sachs International acted as exclusive financial advisor
to Total Produce. Davy Corporate Finance (Davy) acted as
Nomad/Euronext Growth Adviser and corporate broker to Total
Produce. Deutsche Bank Securities Inc. acted as exclusive financial
advisor to the C&C shareholders. Arthur Cox LLP and Skadden,
Arps, Slate, Meagher & Flom LLP are serving as legal counsel to
Total Produce. Bank of America, Co ö peratieve Rabobank U.A. and
Goldman Sachs Bank USA provided the committed financing in relation
to the Transaction.
Investor Call & Presentation
Additional information about today's announcement can be found
in the investor presentation posted on www.totaldole.com and
https://investors.totalproduce.com/investors . A conference call
will be held today to discuss the Transaction at 9:00 AM GMT / 4:00
AM ET / 1:00 AM PT. Participants may join the call by dialling into
the conference call and using the conference ID, which can be found
below. To listen via live webcast, please visit
https://globalmeet.webcasts.com/starthere.jsp?ei=1433853&tp_key=e37015d117
.
A recording of the investor call will also be available after
the call at www.totaldole.com and at
https://investors.totalproduce.com/investors .
Dial-in Numbers
Participant passcode: 693585
Location Phone Type Phone Number
Ireland Tollfree/Freephone 1800 932 638
------------------- -------------------
Ireland, Dublin Local +353 (0)1 246 5652
------------------- -------------------
United Kingdom Tollfree/Freephone 0800 279 4827
------------------- -------------------
United Kingdom, Local Local +44 (0)330 336 9401
------------------- -------------------
United States, Brooklyn Local +1 929-477-0338
------------------- -------------------
United States/Canada Tollfree/Freephone 800-289-0459
------------------- -------------------
Contacts
Blake Sonnenshein, Brunswick Group
bsonnenshein@brunswickgroup.com
+1 212 333 3810
Elizabeth Volpe, Brunswick Group
evolpe@brunswickgroup.com
+ 1 212 333 3810
Brian Bell, Wilson Hartnell PR
brian.bell@ogilvy.com
+ 353-1-669 0030
Important Notice
This Announcement has been issued by and is the sole
responsibility of Total Produce. No representation or warranty,
express or implied, is or will be made as to, or in relation to,
and no responsibility or liability is or will be accepted by
Goldman Sachs International or Davy or by any of their respective
affiliates or agents as to or in relation to, the accuracy or
completeness of this Announcement or any other written or oral
information made available to or publicly available to any
interested party or its advisers, and any liability therefor is
expressly disclaimed.
The distribution of this Announcement may be restricted by law
in certain jurisdictions and persons into whose possession this
Announcement, or other information referred to herein, comes should
inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
Statements in this Announcement with respect to Dole plc, the
Transaction, the IPO, the equity capital raise and other
transactions described in this Announcement, and with respect to
each of Dole plc's, Total Produce's and Dole's business,
strategies, projected financial figures, transaction synergies, and
beliefs, as well as other statements that are not historical facts
are forward-looking statements involving risks and uncertainties
which could cause the actual results to differ materially from such
statements. Statements containing the words "expect", "anticipate"
and similar expressions (or their negative) identify certain of
these forward-looking statements. The forward-looking statements in
this Announcement are based on numerous assumptions regarding the
transactions described in this Announcement and each of Dole plc's,
Total Produce's and Dole's present and future business strategies
and the environment in which each of Dole plc, Total Produce and
Dole will operate in the future. Forward-looking statements involve
inherent known and unknown risks, uncertainties and contingencies
because they relate to events and depend on circumstances that may
or may not occur in the future and may cause the actual results,
performance or achievements to be materially different from those
expressed or implied by such forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond
each of Dole plc's, Total Produce's and Dole's ability to control
or estimate precisely, such as future market conditions, currency
fluctuations, the behaviour of other market participants, the
actions of regulators and other factors such as each of Dole plc's,
Total Produce's and Dole's ability to obtain financing, changes in
the political, social and regulatory framework in which each of
Dole plc, Total Produce and Dole operates or in economic,
technological or consumer trends or conditions. Past performance
should not be taken as an indication or guarantee of future
results, and no representation or warranty, express or implied, is
made regarding future performance. No person is under any
obligation to update or keep current the information contained in
this Announcement or to provide the recipient of it with access to
any additional information that may arise in connection with
it.
This Announcement includes certain stand-alone financial and
other information for Dole. While such stand-alone financial and
other information for Dole has been sourced primarily from
information that has made publicly available by Dole in connection
with past contemplated public market transactions, Total Produce
has made certain adjustments to such information solely for
illustrative purposes. Such stand-alone financial and other
information for Dole as so adjusted is unaudited and has not been
independently verified and no reliance should be placed
thereon.
This Announcement includes certain combined financial
information for Dole and Total Produce. Such combined financial
information has been prepared by adding historical financial
information of Total Produce and Dole, and is not based on a pro
forma presentation reflecting pro forma adjustments. The combined
financial information is provided solely for illustrative purposes,
is estimated and preliminary in nature, only represents current
estimates of the potential impact of the Transaction on Total
Produce and remains subject to change. The underlying figures for
Dole and Total Produce may not be prepared on a comparable GAAP
basis or on the basis of the same (or similar) accounting policies.
Please note that Dole's underlying historical financial information
has been prepared in accordance with US GAAP and is presented in US
dollars. Total Produce's underlying historical financial
information has been prepared in accordance with IFRS, presented in
euro, and has subsequently been converted in accordance with US
GAAP, presented in US dollars. The combined financial information
contained herein is unaudited and has not been independently
verified. No reliance should be placed on the combined financial
information contained in this Announcement.
No statement in this Announcement is intended to be a profit
forecast, and no statement in this Announcement should be
interpreted to mean that earnings per share of Total Produce for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of Total
Produce.
The combined financial information and any future financial
metrics, including those giving assumed effect to the Transaction,
in this Announcement constitute forward-looking statements that are
based on assumptions that are inherently subject to significant
uncertainties and contingencies, many of which are beyond the
control of Dole plc, Total Produce and Dole. The assumptions are
inherently uncertain and are subject to a wide variety of
significant business, economic and competitive risks and
uncertainties that could cause actual results to differ materially
from those contained in the financial information or metrics. The
inclusion of this information in this Announcement should not be
regarded as an indication that Dole plc, Total Produce or Dole
consider this information to be a reliable prediction of future
events. Further, illustrative presentations are not necessarily
based on management projections, estimates, expectations or targets
but are presented for illustrative purposes only.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority in the United Kingdom and regulated
in the United Kingdom by the Prudential Regulation Authority and by
the Financial Conduct Authority, is acting as exclusive financial
adviser to the Company and no-one else in connection with the IPO
and is not, and will not be, responsible to anyone other than the
Company for providing the protections afforded to its clients nor
for providing advice in relation to the IPO and/or any other matter
referred to in this Announcement.
Davy, which is regulated in Ireland by the Central Bank of
Ireland is acting as Nomad/Euronext Growth Adviser and corporate
broker to the Company and no-one else in connection with the IPO
and is not, and will not be, responsible to anyone other than the
Company for providing the protections afforded to its clients nor
for providing advice in relation to the IPO and/or any other matter
referred to in this Announcement.
This Announcement and any statements made in connection with
this Announcement shall neither constitute an offer to sell nor the
solicitation of an offer to buy any securities, or the solicitation
of any proxy, vote, consent or approval in any jurisdiction in
connection with the proposed business combination, nor shall there
be any sale of securities in any jurisdiction in which the offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdictions.
This communication is not intended for distribution to, or use by
any person in, any jurisdiction where such distribution or use
would be contrary to local law or regulation.
Total Produce's Alternative Performance Measures ("APM's") and
Dole's Non-GAAP Financial Measures
To provide additional transparency, Total Produce and Dole have
disclosed APM's and non-GAAP financial measures, respectively, for
Adjusted EBITDA and Adjusted EBIT.
Total Produce:
Adjusted EBIT is earnings before interest, tax, acquisition
related intangible asset amortisation charges and costs, fair value
movements on contingent consideration, unrealised gains or losses
on derivative financial instruments, gains and losses on foreign
currency denominated intercompany borrowings and exceptional items.
It also includes Total Produce's share of these items within joint
ventures and associates and excludes Total Produce's 45% interest
in Dole Holdings.
Adjusted EBITDA is earnings before interest, tax, depreciation
on property, plant and equipment, acquisition related intangible
asset amortisation charges and costs, fair value movements on
contingent consideration, unrealised gains or losses on derivative
financial instruments, gains and losses on foreign currency
denominated intercompany borrowings and exceptional items. It also
includes Total Produce's share of these items within joint ventures
and associates and excludes Total Produce's 45% interest in
Dole.
Dole:
Adjusted EBIT is calculated from net income (loss) by adding the
loss from discontinued operations, net of income taxes, by adding
interest expense from continuing operations, by subtracting the
income tax benefit or adding the income tax provision from
continuing operations and by (1) adding the net unrealized loss or
subtracting the net unrealized gain on derivative instruments; (2)
adding the net unrealized loss or subtracting the net unrealized
gain on foreign denominated intercompany borrowings; (3) adding the
net realized loss or subtracting the net realized gain on noncash
settled foreign denominated intercompany borrowings; (4) adding
restructuring charges; (5) subtracting the gain on asset sales for
assets held for sale and actively marketed land; (6) adding
vegetable recalls and related costs; (7) adding refinancing charges
and other debt related costs; (8) adding litigation and transaction
costs; (9) adding asset write-downs; and (10) adding costs that are
directly related to the COVID-19 pandemic, and are as follows: (i)
incremental to charges incurred prior to the outbreak, (ii) not
expected to recur once the crisis has subsided and operations
return to normal, and (iii) clearly separable from normal
operations.
Adjusted EBITDA is calculated from Adjusted EBIT and adding
depreciation and amortization.
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END
MSCFIFESFAIDLIL
(END) Dow Jones Newswires
February 17, 2021 02:00 ET (07:00 GMT)
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