Belgium-based Greenyard NV the fresh and frozen food giant said Tuesday it was holding advanced talks to buy Dole Food Company, the largest producer of fruits and vegetables in the world.
Dole, based in California, is one of the world’s largest pineapples and bananas producers, and could have a value of over $2.5 billion, including debt, said people close to the negotiations. Greenyard has a €859 million or $1.03 billion market capitalization.
Greenyard secured the needed financing, and is very confident in the ability it has to complete such a transaction as this, with a financial approach that is balanced should an agreement come to fruition with Dole, said the company in a prepared statement.
The new entity after combining the two companies would create a company with revenue annually of more than €8 billion.
Shares in Greenyard, which is Brussels-listed and half-owned by the Belgian family of Hein Deprez an entrepreneur, were up over 1.9% in early Tuesday morning trading in Europe, after a rise of more than 3.3% during Monday trading.
For the 94-year old chairman of Dole David Murdock, the Greenyard deal would offer a fast way for him to cash out of ownership of the company, which also has been considered a possibility for an initial public offering.
For Greenyard, a company that likes to buy up others that began as a grower of mushroom during the 1980s, this deal would give it the ability to branch out into the United States. It could supply existing U.S. business customers liked Ahold Delhaize, Aldi and Lidl.
One market analyst said that today’s fruit and vegetable distribution market is very fragmented where Dole is operating. For example, in some markets where they have talked about becoming more ambitious included the United Kingdom, the United States and France, Dole would certainly give them the key they need to enter the United States.
An industry analyst in Europe said that from a strategic standpoint, the acquisition makes sense creating a big player in both the United States and Europe. The analyst added that Greenyard would have to raise over €500 million to maintain its net debt to EBITDA ration at less than 3.5.
When messages were left for a comment by Dole Food Company, no immediate response was received.