Dole Food sells two businesses to Itochu for $1.7 billion

TOKYO (Reuters) - Dole Food Company Inc will sell two businesses to Itochu Corp for $1.7 billion in cash - a deal that will help the world's largest fruit and vegetable producer pay down debt and expand Itochu's food presence in new markets.

Dole, founded in 1851, has struggled with volatile demand and low prices for bananas, its biggest-selling product.

In contrast, thanks to a strong yen and flush reserves of cash, Japanese trading houses have been active in overseas acquisitions, particularly non-resources firms, as they look to diversify their profit streams.

The sale of Dole's world-wide packaged foods and Asia fresh produce businesses will be used to reduce debt and pay for restructuring that the company expects to implement by the end of fiscal 2013 and which will result in $50 million in costs savings annually.

Under the deal, Itochu will have exclusive rights to the DOLE trademark on packaged food products worldwide and on fresh produce in Asia, Australia and New Zealand.

Itochu's purchase comes about four months after Marubeni Corp announced a multi-billion dollar deal to buy U.S. grain merchant Gavilon.

Last year, Mitsui & Co spent a little more than $1 billion for a stake in Asia's largest hospital operator IHH Healthcare Bhd .

Prior to the deal, Itochu estimated about 15 percent of its 280 billion yen ($3.6 billion) net profit for the current business year will come from its food business, compared to the almost 40 percent expected from its metals division.

Dole, which distributes produce and fresh fruit worldwide, began exploring strategic options in May and said in July it was in talks to sell or spin off its packaged foods business and was considering a deal in Asia.

Its packaged foods business includes canned pineapple, canned pineapple juice, fruit juice concentrate, fruit in plastic cups and other packages and frozen fruit.

The company's shares closed at $13.70 on Monday on the New York Stock Exchange. Itochu shares fell 0.2 percent to 828 yen on Tuesday. ($1 = 78.8150 Japanese yen)

(Reporting by Ashutosh Pandey in Bangalore and Aaron Sheldrick in Tokyo; Editing by Edwina Gibbs)

Source: http://news.yahoo.com/japans-itochu-buy-dole-food-businesses-1-7-003506027--sector.html

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