Shares in fresh produce company Total Produce jumped over 32% today after it announced that it will combine with the Dole Food Company and will move its listings from Dublin and London to the US.
In 2018, Total Produce agreed to buy a 45% stake in Dole Food Company, one of the world's biggest fresh fruit and vegetable companies - for €300m.
The combined company, operating under the Dole brand, will be incorporated in Ireland, with its global headquarters in Dublin and the headquarters for the Americas in Charlotte, North Carolina.
In a statement, Total Produce said the deal will simplify the existing structure between the two companies by unifying Dole and Total Produce under common ownership.
It said the deal will create the potential for significant revenue synergies and cost efficiencies and a platform to pursue growth from a broader set of available commercial opportunities.
Under the terms of today's deal, Total Produce shareholders will receive 82.5% of Dole plc shares.
Shareholders of Castle & Cooke, which own a 55% interest in Dole's parent company (Dole Holdings), will receive 17.5% of Dole plc shares.
In connection with today's deal, the company said it intends to raise $500-700m in equity capital to strengthen and de-lever the combined balance sheet.
After the deal is complete, Dole will be the biggest fresh produce company in the world with estimated combined 2020 revenue of about $9.7 billion, adjusted EBITDA of approximately $379m and total assets of about $4.5 billion.
The 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 deal is subject to approval by Total Produce shareholders, regulatory approvals, market conditions and customary conditions, Total Produce said.
Carl McCann, Chairman of Total Produce, said the transaction 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," Carl McCann said.
He said the intention to list the new company in the US 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," Mr McCann said.
"We look forward to beginning this next chapter and providing increased opportunity for our shareholders, dedicated employees, customers, suppliers and partners," he added.
Commenting on the move from Total Produce, Davy Stockbrokers said the proposed deal structure is in equal part novel as it is value accretive.
"Achievement of the minimum agreed IPO valuation condition catalyses significant equity upside for existing shareholders. The targeted $500-700m equity raise fundamentally reshapes the capital structure and provides a foundation for future investment and growth," the stockbrokers added.
Shares in the company moved sharply higher in Dublin trade today.
