Struggling Dole Food Company Inc has agreed to sell its worldwide packaged foods and Asia fresh produce businesses to Japanese trading house Itochu Corp <8001.T> for $1.7 billion in cash.
Dole, which has been hit by volatile demand and low prices for bananas, its biggest-selling product, plans to realign and streamline its global personnel and corporate structure in line with its remaining fresh produce businesses.
Cash proceeds from the deal will be used by Dole to reduce debt, to pay deal-related expenses, and for restructuring and other corporate purposes, the company said in a statement.
According to the terms of 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.
Reuters reported last week that the world's largest fruit and vegetable company was in advanced talks to sell its businesses to Itochu.
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.
Dole expects to implement restructuring measures by the end of fiscal 2013 and the steps are expected to result in $50 million in costs savings annually for the company.
Dole shares closed at $13.70 on Monday on the New York Stock Exchange.
(Reporting by Ashutosh Pandey in Bangalore; Editing by Edwina Gibbs)