Dole: debt and competition make offer less tasty

At first glance, the initial public offering proposed by Dole should be as easy as one of the fruit salads.Fresh from the company merger Totally produced in Ireland earlier this year, it is one of the top fruit and vegetable producers in the world. Growth is steadily progressing, albeit not explosively, thanks to the transition to a healthier diet. Unlike many new publishers these days, it’s beneficial.

Still, the plan to sell shares at a $ 2.1 billion valuation may not suit everyone’s tastes. Fierce competition, thin margins, and high debt can reduce the appetite of a product.

After the IPO, Dole says it will have a net debt of $ 1.1 billion, about three times that of last year’s adjusted ebitda. Irish fruit distributor Fyffes traded in multiples less than twice during its preparatory phase. 2016 acquisition According to Capital IQ data, it is from a subsidiary of Japanese conglomerate Sumitomo.

Interest expense was $ 72 million, about the same as last year’s doll’s net income.

Still, the company is trying to increase investor enthusiasm by looking at growth prospects. According to GlobalData, the fresh fruit and vegetable market is worth $ 335 billion in 2019 in North America and Europe. At Dole, last year’s revenue increased nearly 4% on a proforma basis to $ 9 billion.

While dolls are primarily sourced from fresh fruits such as bananas and pineapples, the company also sells ready-to-use products such as vegetables, packaged salads, fruit juices and fruit cups, which are profitable. According to the company, it plans to expand its presence in berries and avocados, where demand is growing most rapidly.

However, agriculture is a business that is influenced by many external factors. Immigration changes, crop illnesses, or bad weather can throw a wrench on the best growth forecasts. At the same time, large indoor farming companies such as App Harvest and Aero Farms have successfully acquired investor capital and established themselves in the listed market. Future investors will have no shortage of companies to choose from.

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