Total Produce, Europe's leading fresh produce company, announced it has entered into a binding agreement to acquire a 45% equity stake in Dole Food Company for a cash consideration of $ 300m. The deal brings together two of the world's leading fresh produce companies, with complementary market positions in various product segments and geographies.
The transaction consideration for the 45% interest implies a Dole EV of $ 2 bn, i.e. 9x EBITDA 2016.
Dole is one of the world's largest fresh fruit and vegetables producer and distributor. For the twelve months ended October 7, 2017, Dole generated revenue and adj. EBITDA of $ 4.5bn and $ 237m, respectively. Over the period FY-14/FY- 17, Dole has generated an average annual adj. EBITDA of $ 227m.
The transaction structure implies Total Produce has the right, but not the obligation, to purchases in the next few years additional tranches up to 100% of Dole share capital for a total consideration equal to 9x three year average historical Dole adj. EBITDA less net debt.
The sector is in the midst of a consolidation process. After the purchase of Fyffes by Sumitomo for 13.8x EBITDA in Dec-16, this news appears as a further acceleration of this trend, in an industry where volumes are key aspect to leverage well structured - deep rooted distribution platforms.
Orsero is currently trading at 7.7x and 5.5x EV/EBITDA 2017 and 2018, respectively. Simply applying the multiple paid by Total Produce to Orsero, the equity value obtained is significantly higher the current market value.
NB: Le considerazioni finali sono di Luca Arena, Head of Equity Research di CFO SIM . Ringraziamo l CFO SIM per la disponibilita' offertaci di riportare il loro comunicato e le loro osservazioni finali sulla transazione
Guido Bellosta è un trader privato e potrebbe detenere gli strumenti finanziari oggetto delle sue analisi risultando così in conflitto di interesse con i lettori.
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