Dole Food Co., the world's biggest supplier of fresh fruit and vegetables, said Tuesday it has agreed to sell its food packaging and Asia fresh produce businesses to Itochu Corp. for $1.69 billion in cash.
The deal gives Itochu, Japan's third-largest trading house, assets that generated $2.5 billion in revenue last year, and helps Dole cut debt, California-based Dole said in a statement.
Itochu also wins exclusive rights to the Dole trademark on packaged foods worldwide and on fresh produce in Asia, Australia and New Zealand, Dole said.
As Dole focuses on fresh produce in the Americas, Europe and Africa, Itochu follows a list of Japan's major trading houses buying food assets abroad.
Marubeni Corp. offered to buy U.S. grain merchandiser Gavilon Group LLC for $5.6 billion in May, while Mitsui & Co. took control of Brazil's Multigrain SA in 2011.
The agreement with Dole will make the acquisition Itochu's biggest outside resources on record, according to data compiled by Bloomberg. Itochu earns more than half its profit from the sourcing and sale of metal and energy commodities.
The Asian operations of Dole, controlled by 89-year-old Chairman David Murdock, include pineapple and banana farms in the Philippines as well as ripening and distribution centers in Japan, South Korea, China, Australia, Taiwan and Thailand, according to a 2009 document on the company's website.
Itochu's food unit had net income of ¥22.4 billion in the 12 months ended March 31, contributing 7.5 percent to the company's ¥300.5 billion record profit for the fiscal year.
Itochu trades wheat, vegetable oils, soybean, sugar and beverages and co-owns a Chinese beer business with Asahi Group Holdings Ltd., according to its annual report.
Itochu aims to almost double profit to ¥40 billion in three years from food businesses that include FamilyMart Co., according to the company's annual report.