Dole shares jump 8 percent on hopes of packaged foods deal

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NEW YORK (Global Markets) - Dole Food Co Inc (DOLE.N) shares rose more than 8 percent on Friday, a day after the world's largest fruit and vegetable company said it was in talks about selling or spinning off its packaged foods business, and was eyeing a deal in Asia.

On Thursday, Dole said it has been in talks with numerous third parties who have expressed interest in certain businesses.

For its packaged foods business, Dole said it is exploring a possible sale or spin-off. It also said it was considering combining that business with other Dole operations in Asia to form a stand-alone Asia-based business, either through a possible joint venture or an initial public offering in Asia.

Dole Chief Executive Officer David DeLorenzo told analysts that a month or two ago, when they first started exploring options, that executives felt they might be able to get a higher valuation in Asia than in North America.

"When we got into the process and we were talking to different companies that either contacted us or our advisors had contacted, we generated a lot of interest coming out of Asia," DeLorenzo said. "So that prompted us to look at all different options."

He also said he was confident some kind of transaction would happen by the end of the year.

Janney Capital Markets analyst Jonathan Feeney said an Asian partnership or IPO was a sensible alternative.

"Dole's packaged foods arm has a well-known brand, with logistics and presence in several large Asian countries that are viewed by many global food and beverage players as highly attractive," Feeney said in a research note.

Feeney added that the planned acquisition of Bolthouse Farms by Campbell Soup (CPB.N), at 10 times earnings before interest, taxes, depreciation and amortization, made him think that his projection for a deal at 8.5 times EBITDA, which would be worth roughly $1 billion, could prove conservative.

Dole's packaged foods business includes canned pineapple, canned pineapple juice, fruit juice concentrate, fruit in plastic cups and other packages and frozen fruit. It's other businesses sell fresh bananas, pineapples and berries, and more than 20 different types of fresh vegetables as well as bagged salads.

Dole shares were up 68 cents, or 7.7 percent, at $9.51 on the New York Stock Exchange. They earlier had earlier rising as high as $10.06.

(Reporting By Martinne Geller in New York; Editing by David Gregorio)