Guess the revised IPO range doesn't change your thesis much? you initially estimated TP shareholders' ownership in Dola at ca 55% it's now being reduced from 61.5% to 57.1% using the new range? thank you
I'm surprised they didn't meet the valuation floor but in the absence of any change in fundamentals (which I'm not aware of), this makes the deal look cheaper at 7x PF EBITDA before synergies and ~6.4x including synergies.
When you get it, share your thoughts please. I don,t fully understand what does it mean they didn,t meet the valuation floor... and what has been the deal changes the “C&C shareholders” have asked for from the previous agreement. Thaks a lot!!
Thanks Eason. Yes, there is a time gap - per the transaction circular published in May, TP will de-list in late July, then complete the merger with Dole via the scheme of arrangement and then proceed with the IPO post-merger.
great read, just one question. When you mention "I believe a market re-rating of Dole is likely within a 12-24 month time-frame. The recent listing experience of peer Mission Produce (AVO), a much smaller and niche avocado producer, supports this thesis - AVO initially listed on the Nasdaq at $12/share (~11x) in Oct-20, before re-rating to $21/share (~16x – 17x) by Feb-21."
Yes, AVO is facing some challenges, and disappointed on earnings recently with supply chain and other issues. I think Dole should trade at a premium to AVO and isn't as susceptible to the same issues
Does anyone also have the problem of not being able to sell the merged stock? According to my broker, Euroclear does not allow to make the original shares (registered in Ireland) tradeable in the US, which sounds really weird.
What am I missing? The IPO price range is 16 to 17 USD, lets take the midpoint of this, 16.5. 7 TP shares give 1 new share, so 1TP share is worth 16.5/7=2.35 USD = 2 Euro, which is 15% BELOW the current TP of 2.32 EUR, ever after the drop. So I am buying into an expected loss?
If I understand it correctly, the IPO price - although being lower than today's price - would lead to an EV/EBITDA around 8X, which is much lower than that industry averages (15X).
I guess if you're able to participate in the IPO ... you could go with that option, otherwise it depends on how the stock will behave after the IPO ...
Agree with ES, IPO price is below current TP share price so as things stand the IPO might offer the better deal (assuming it doesn't pop, which seems unlikely now)
July 23rd is the date the Company's share register will be closed off before the share exchange occurs; my sense is that sellers who do not want to participate are exiting resulting in the share price drop today. So a technical reason, no fundamentals have changed. The exact date for ceasing to trade has not been announced but I'd expect it to be this week potentially.
In Total Produce, in Investors news, they claim: "Total Produce plc shares will be suspended from trading on Euronext Growth and AIM at 7.30 am (Irish time) on 30 July 2021."
Thanks for writing this Conor, a couple of questions if possible:
- Peers multiples and valuation: why 15x? I know the company mentioned Lamb Weston, Calavo and Mission. But these are more specifically linked to french fries and avocados (with different dynamics). Closest peer is Delmonte which trades at 9x. Greenyard in Belgium trades at 7.2x EBITDA and Bonduelle at 7.8x.
- Net debt: how do you get to $0.9bn vs the $1.1bn indicated in the F1?
On the valuation, my 14.5x is based on US listed peers average multiple over the last 10 years, as an assumed through-the-cycle or normalised multiple.
Fresh Del Monte has been a terrible performer and this is reflected in its multiple.
Calavo and Mission are perhaps the most directly comparable to new Dole Plc as US listed fresh produce businesses (Lamb Weston is really a frozen potato business and not as comparable).
While these have some different dynamics, I would argue these businesses are smaller, niche ones that are obviously less diversified, and without the market leadership position and scale advantages of Dole.
Bonduelle and Greenyard are European listed and so have always traded at a discount to Del Monte and US listed names, so I see these are less relevant comparables given part of the thesis here is re-rating partially driven by the likely more liquid and more followed US listing.
So as a US-listed, global market leader with all the advantages that entails over peers, I believe Dole Plc warrants a multiple at least on a par with smaller, niche peers. Also note that these peers currently trade at ~18x and I'm still assuming a discount to that at 14.5x.
Really liked the report, thank you for sharing. A couple questions I had:
Do you think a lot of the existing TOT ID holders will be forced sellers once this is listed in US? Looking through the holders list seems like a lot of these guys are Europe-focused, but I could be wrong. If so, do you think it's better to buy ahead of the IPO, or wait until afterward and that potential selling pressure?
The LTM EBITDA as of 1q21 is ~$400mm (which is presumably before synergies) and that seems to be what they're guiding the street to in 2022. Is there something abnormally positive in the LTM period? I would have thought EBITDA should grow from the LTM period, especially given the synergies? Is there a reason the organic biz should decline over the next 1-2 years before returning to their long-term growth algo? Also, do you know if the 5-7% adj ebitda growth is meant to be inclusive of realizing synergies, or do you think synergies should layer in on top of that base growth?
The minority interest expense running through the combined income statement was ~$24mm in 2020. Do you know specifically what this is or if this is something they pay out in cash annually? I think you mentioned you just add $130mm to the TEV calc, but was curious why not capitalize at the same multiple you apply to the rest of the business?
Hi JP, thanks for reading and the feedback. Taking your questions in turn:
1. Existing European TP shareholders - yes, I do expect some of the European holders to need to sell post-IPO, purely for mandate reasons. Will the stock drops post-IPO as a result? Possibly, but we cannot know for sure how and when such holders might sell. In any event, at the current TP price, you're getting in "pre-IPO" at a compelling valuation where the re-rating potential offsets any likely (and temporary) decline from forced selling. To hold off for forced selling post-IPO, assumes one can guess what other holders will do and when, or essentially a market timing exercise so I'd rather be an IPO insider now given where I see the value. If it drops post-IPO, then maybe thats an opportunity to add.
2. Within the LTM period, Q1 FY21 (to March) saw generaly price and volume increases across most segments of both TP and DFC, as well as some FX tailwinds. Are the price increases abnormal? My sense is no, these reflect general inflationary conditions and given the essential staple nature, price increases such as these can and are passed onto consumers. Regarding the LT EBITDA growth of 5%-7%, yes I believe synergies are included within this.
3. Min. Int expense - these are minority shareholders' share of profits being expensed out, and these are paid out in cash annually. Minority interests relate to subsidiaries acquired where TP/DFC own a controlling equity stake but a third party (e.g. key management of the sub acquired) owns a minority portion of the equity. Therefore these minorities are entitled to their proportionate share of profits and cash-flows. These minority interest outflows are below the line for EBITDA as presented, so are already captured in EBITDA. As such, the TEV implicitly includes the minority interest capital, which needs to be deducted from TEV to get to the equity value. Given how small these interests are relative to the overall group, I assume book value approximates the fair value of these minority interests. If I was to capitalise the $21m at 14.5x = $304m or ~$175m incremental deduction from equity value, equating to ~€0.17 / share based on the original analysis. Firstly i don't think this is material, and secondly this would assume these minority subs are worth 14.5x on a standalone basis, which I don't believe they could be, as it's really the combined group as global market leader that is worth 14.5x. Hope this makes sense.
Thank you. That all makes sense. I appreciate the answer.
By the way I got to talk to mgmt a few minutes ago. They did mention that the price increases in 1q had some super inflation related to bananas given some constraints in the industry, so you would probably see that revert over time. They also said the 5-7% ebitda growth est includes M&A, but didn't specify how much.
One other thing about using the FDP multiple on an EBITDA basis (which everyone I talk to seems to be anchoring): FDP capex as a % of EBITDA is 2x as high as new Dole. So even putting them on similar ebitda-capex multiples (which I understand you are saying you shouldn't because new Dole is better), I would think Dole's EBITDA multiple would be higher.
That's interesting, thanks for sharing this insight. On the banana category, the banana price inflation clearly drove the Dole Foods side of the business, with EBITDA up +28% YoY in Q1, but I don't believe so to the same extent for Total Produce, with EBITDA +74% excluding its share of Dole. Interesting that M&A is a factor in the 5%-7% growth rate, this wasn't clear from the transaction presentation materials but presumably what was meant by "development opportunities."
Agreed on the FDP vs. Dole multiple also. It's understandable that most people would pin this to FDP's multiple at the outset but when you compare relative performance, ROIC etc., TP/Dole clearly warrants a higher multiple in my view, and you're right on the capex point also.
Thanks for reading Alberto. No confirmed date yet for the de-listing, other than the indicated timeline of "Late July 2021" per the Transaction Circular.
So my sense is we can expect a de-listing to occur within the next 1-2 weeks.
Interactive brokers won’t trade Euronext listed stocks. Is it safe to buy the one listed in London aside from getting a little screwed on currency and lack of liquidity?
Are there any unusual tax consequences or stamp fees related to the share exchange and re-listing that you're aware of? I didn't see anything out of the ordinary but curious if you did
Sorry if this is a stupid question, but is there any incentive to underprice the IPO, and how many shares do you think they will issue? If you have access to the IPO, do you think it will price above the current price of TP (should you buy shares now or wait for the IPO if you can buy at the IPO price)? Thanks in advance for any response.
Not at all, thanks for reading and commenting. The low valuation floor may well be to ensure the IPO is well subscribed to and the valuation floor is exceeded.
Based on the numbers in the Transaction Circular, my analysis indicates the post-IPO share count will be ~101m shares, with ~33m new shares to be issued in the IPO - I'll refer you to the Transaction Overview section, Step 2 for the workings behind this.
Regarding the IPO price, I think this will be above the current floor price indicated, and probably above the current TP-equivalent share price.
Conor - Thanks for the writeup. Trying to find interest expense on the new debt. Do you have a ballpark number? Looks like the old Dole debt was around 6%
Hi Mason, thanks for reading and commenting. Interest cost of the new debt is disclosed on p. 211 of the F-1 filed with the SEC last week. Per the F-1:
$600m RCF & the $300m TLA – priced at option of borrower as either LIBOR + 1.00% – 2.75%, or a base rate + 0.00% - 1.75%
$540m TLB – priced again at option of borrower as either LIBOR + 2.00%, with LIBOR floor of 0.00%, or a base rate plus 1.00%.
In each case, the final pricing will be determined by credit ratings and net leverage position.
Also, the TLA amortises at 2.5% of principal value annually, while TLB amortises at 1.0% of principal annually
Note the RCF is not expected to be drawn down at completion.
Jose, its stated in both the Transaction Circular document - "Subject to the adoption of a mandatory share exchange mechanism by the approval of a scheme of arrangement
(the “Scheme of Arrangement”), the Board of Total Produce will be authorised to implement a share exchange
so that all shares in Total Produce will be exchanged for new shares in Dole plc on the basis of seven Total Produce
Shares for one Ordinary Share in Dole plc (the “Share Exchange”). "
Also stated again on p. 64 of the Amended F-1/A filing today - "We will acquire 100% of the issued share capital of Total Produce by implementing the Share Exchange. Pursuant to the Share
Exchange, we will issue one (1) of our ordinary shares to each Total Produce shareholder as of the record date specified by the board of
directors of Total Produce for every seven (7) Total Produce shares that are transferred to us, such that the Total Produce shareholders will
collectively own 82.5% of our ordinary shares on a fully diluted basis as of immediately following the Share Exchange and the Merger and
Thanks for this information, and my most sincere congratulation for such a fantastic study case and detailed information!. I will follow the blog very closely in the future. Thanks a lot for your effort!
Great write-up really love this. Just echoing Eason's question. Is there a time gap between the de-listing and US IPO that we cannot trade the stock? And how do those mechanics work do the shares just sit in our account with no volume?
Thanks for reading and commenting Ben. I've now responded to Eason's question on the same point, but yes there is a time gap between TP de-listing and the IPO. Current TP shares are exchanged for new shares in Dole Plc via the scheme of arrangement, so I would expect these shares will sit in shareholders accounts but will not trade or be trade-able until the IPO completes.
Thanks for the writeup and for highlighting the situation. The phasing is a little unusual (what happens in the event of no IPO and what is the corporate governance of the private company you are holding in the interim?) but I'm yet to dig into the circular so hopefully there is some colour there! Almost makes you wonder whether a (backstopped) SPAC deal might have made sense for certainty, although with the scheme that is also quite complex.
Hi Alex, thanks for reading and your question. If the IPO does not happen, then the merger is terminated and the situation reverts back to current position as two separate companies, with TP remaining listed on the Euronext Dublin and continuing to own 45% of DFC. On your SPAC point, I think an IPO makes the most sense here, as a SPAC would likely add further complexity to an already complicated situation. I also think management would prefer a direct formal listing rather than the SPAC route.
Ah thanks for the clarification, so the scheme and delisting is conditional upon the IPO - didn't know that was possible for delisting (schemes are v. handy!) - will take a look at the circular myself when I get a chance.
Not wild on SPACs but they would have been able to guarantee listing at the price that is currently a distracting condition, although sector isn't maybe what SPAC investors get excited about. If I were a sponsor I might have thought this was an opportunity to deploy an ageing vehicle to facilitate a transaction whilst everyone is fighting over the unicorns - on first impression company looks a relatively straightforward underwrite for PIPE + credit too.
Guess the revised IPO range doesn't change your thesis much? you initially estimated TP shareholders' ownership in Dola at ca 55% it's now being reduced from 61.5% to 57.1% using the new range? thank you
I'm surprised they didn't meet the valuation floor but in the absence of any change in fundamentals (which I'm not aware of), this makes the deal look cheaper at 7x PF EBITDA before synergies and ~6.4x including synergies.
Makes sense, thank you. I'm a bit surprised too. Maybe US funds saw the recent TP stock price performance and asked for a discount
Hard to know at this point. I'm trying to get further colour on this.
When you get it, share your thoughts please. I don,t fully understand what does it mean they didn,t meet the valuation floor... and what has been the deal changes the “C&C shareholders” have asked for from the previous agreement. Thaks a lot!!
Thanks for sharing! Nice write up. Is there a time gap between the de-listing and US IPO that we cannot trade the stock?
Thanks Eason. Yes, there is a time gap - per the transaction circular published in May, TP will de-list in late July, then complete the merger with Dole via the scheme of arrangement and then proceed with the IPO post-merger.
great read, just one question. When you mention "I believe a market re-rating of Dole is likely within a 12-24 month time-frame. The recent listing experience of peer Mission Produce (AVO), a much smaller and niche avocado producer, supports this thesis - AVO initially listed on the Nasdaq at $12/share (~11x) in Oct-20, before re-rating to $21/share (~16x – 17x) by Feb-21."
Are you referring to EV/EBITDA multiples?
Yes, EV/EBITDA
also it looks like AVO is back to 11x EV/EBITDA multiples... thoughts?
Yes, AVO is facing some challenges, and disappointed on earnings recently with supply chain and other issues. I think Dole should trade at a premium to AVO and isn't as susceptible to the same issues
Thanks for an excellent write-up, despite the unfortunate (or fortunate) price action over the last 3M. A pretty compelling setup at this point.
Does anyone also have the problem of not being able to sell the merged stock? According to my broker, Euroclear does not allow to make the original shares (registered in Ireland) tradeable in the US, which sounds really weird.
What am I missing? The IPO price range is 16 to 17 USD, lets take the midpoint of this, 16.5. 7 TP shares give 1 new share, so 1TP share is worth 16.5/7=2.35 USD = 2 Euro, which is 15% BELOW the current TP of 2.32 EUR, ever after the drop. So I am buying into an expected loss?
Yes the IPO price is cheaper than the current TP price.
If I understand it correctly, the IPO price - although being lower than today's price - would lead to an EV/EBITDA around 8X, which is much lower than that industry averages (15X).
Assuming IPO price of $16.50, multiple is 7x, based on 98.4m shares post-IPO and assuming the underwriters don't take up their 4.5m allotment.
the current TP price is not EUR2.32 ... it's 2.1EUR
Still above the implied price of 2 Euro, so why should one buy TP?
I guess if you're able to participate in the IPO ... you could go with that option, otherwise it depends on how the stock will behave after the IPO ...
Agree with ES, IPO price is below current TP share price so as things stand the IPO might offer the better deal (assuming it doesn't pop, which seems unlikely now)
when do these stop trading? I thought July 23 but i see i a big loss on my P&L today, ha
July 23rd is the date the Company's share register will be closed off before the share exchange occurs; my sense is that sellers who do not want to participate are exiting resulting in the share price drop today. So a technical reason, no fundamentals have changed. The exact date for ceasing to trade has not been announced but I'd expect it to be this week potentially.
thanks!
James, as a follow up to your question it was announced this morning that it is expected that TP shares will cease trading on 30th July
Great, thanks so much
In Total Produce, in Investors news, they claim: "Total Produce plc shares will be suspended from trading on Euronext Growth and AIM at 7.30 am (Irish time) on 30 July 2021."
Thanks for writing this Conor, a couple of questions if possible:
- Peers multiples and valuation: why 15x? I know the company mentioned Lamb Weston, Calavo and Mission. But these are more specifically linked to french fries and avocados (with different dynamics). Closest peer is Delmonte which trades at 9x. Greenyard in Belgium trades at 7.2x EBITDA and Bonduelle at 7.8x.
- Net debt: how do you get to $0.9bn vs the $1.1bn indicated in the F1?
thank you for your work in writing up the idea
Hi, thanks for reading and commenting.
On the valuation, my 14.5x is based on US listed peers average multiple over the last 10 years, as an assumed through-the-cycle or normalised multiple.
Fresh Del Monte has been a terrible performer and this is reflected in its multiple.
Calavo and Mission are perhaps the most directly comparable to new Dole Plc as US listed fresh produce businesses (Lamb Weston is really a frozen potato business and not as comparable).
While these have some different dynamics, I would argue these businesses are smaller, niche ones that are obviously less diversified, and without the market leadership position and scale advantages of Dole.
Bonduelle and Greenyard are European listed and so have always traded at a discount to Del Monte and US listed names, so I see these are less relevant comparables given part of the thesis here is re-rating partially driven by the likely more liquid and more followed US listing.
So as a US-listed, global market leader with all the advantages that entails over peers, I believe Dole Plc warrants a multiple at least on a par with smaller, niche peers. Also note that these peers currently trade at ~18x and I'm still assuming a discount to that at 14.5x.
Hope this makes sense.
Thank you, it makes sense. Appreciate the answer and thanks again for your write up
Really liked the report, thank you for sharing. A couple questions I had:
Do you think a lot of the existing TOT ID holders will be forced sellers once this is listed in US? Looking through the holders list seems like a lot of these guys are Europe-focused, but I could be wrong. If so, do you think it's better to buy ahead of the IPO, or wait until afterward and that potential selling pressure?
The LTM EBITDA as of 1q21 is ~$400mm (which is presumably before synergies) and that seems to be what they're guiding the street to in 2022. Is there something abnormally positive in the LTM period? I would have thought EBITDA should grow from the LTM period, especially given the synergies? Is there a reason the organic biz should decline over the next 1-2 years before returning to their long-term growth algo? Also, do you know if the 5-7% adj ebitda growth is meant to be inclusive of realizing synergies, or do you think synergies should layer in on top of that base growth?
The minority interest expense running through the combined income statement was ~$24mm in 2020. Do you know specifically what this is or if this is something they pay out in cash annually? I think you mentioned you just add $130mm to the TEV calc, but was curious why not capitalize at the same multiple you apply to the rest of the business?
Thanks again for the write up.
Hi JP, thanks for reading and the feedback. Taking your questions in turn:
1. Existing European TP shareholders - yes, I do expect some of the European holders to need to sell post-IPO, purely for mandate reasons. Will the stock drops post-IPO as a result? Possibly, but we cannot know for sure how and when such holders might sell. In any event, at the current TP price, you're getting in "pre-IPO" at a compelling valuation where the re-rating potential offsets any likely (and temporary) decline from forced selling. To hold off for forced selling post-IPO, assumes one can guess what other holders will do and when, or essentially a market timing exercise so I'd rather be an IPO insider now given where I see the value. If it drops post-IPO, then maybe thats an opportunity to add.
2. Within the LTM period, Q1 FY21 (to March) saw generaly price and volume increases across most segments of both TP and DFC, as well as some FX tailwinds. Are the price increases abnormal? My sense is no, these reflect general inflationary conditions and given the essential staple nature, price increases such as these can and are passed onto consumers. Regarding the LT EBITDA growth of 5%-7%, yes I believe synergies are included within this.
3. Min. Int expense - these are minority shareholders' share of profits being expensed out, and these are paid out in cash annually. Minority interests relate to subsidiaries acquired where TP/DFC own a controlling equity stake but a third party (e.g. key management of the sub acquired) owns a minority portion of the equity. Therefore these minorities are entitled to their proportionate share of profits and cash-flows. These minority interest outflows are below the line for EBITDA as presented, so are already captured in EBITDA. As such, the TEV implicitly includes the minority interest capital, which needs to be deducted from TEV to get to the equity value. Given how small these interests are relative to the overall group, I assume book value approximates the fair value of these minority interests. If I was to capitalise the $21m at 14.5x = $304m or ~$175m incremental deduction from equity value, equating to ~€0.17 / share based on the original analysis. Firstly i don't think this is material, and secondly this would assume these minority subs are worth 14.5x on a standalone basis, which I don't believe they could be, as it's really the combined group as global market leader that is worth 14.5x. Hope this makes sense.
Thank you. That all makes sense. I appreciate the answer.
By the way I got to talk to mgmt a few minutes ago. They did mention that the price increases in 1q had some super inflation related to bananas given some constraints in the industry, so you would probably see that revert over time. They also said the 5-7% ebitda growth est includes M&A, but didn't specify how much.
One other thing about using the FDP multiple on an EBITDA basis (which everyone I talk to seems to be anchoring): FDP capex as a % of EBITDA is 2x as high as new Dole. So even putting them on similar ebitda-capex multiples (which I understand you are saying you shouldn't because new Dole is better), I would think Dole's EBITDA multiple would be higher.
That's interesting, thanks for sharing this insight. On the banana category, the banana price inflation clearly drove the Dole Foods side of the business, with EBITDA up +28% YoY in Q1, but I don't believe so to the same extent for Total Produce, with EBITDA +74% excluding its share of Dole. Interesting that M&A is a factor in the 5%-7% growth rate, this wasn't clear from the transaction presentation materials but presumably what was meant by "development opportunities."
Agreed on the FDP vs. Dole multiple also. It's understandable that most people would pin this to FDP's multiple at the outset but when you compare relative performance, ROIC etc., TP/Dole clearly warrants a higher multiple in my view, and you're right on the capex point also.
When is it specteb to be delisted from europe? You said late july but dobwe know the date? Thaks a lot!!! Great work!
Thanks for reading Alberto. No confirmed date yet for the de-listing, other than the indicated timeline of "Late July 2021" per the Transaction Circular.
So my sense is we can expect a de-listing to occur within the next 1-2 weeks.
Interactive brokers won’t trade Euronext listed stocks. Is it safe to buy the one listed in London aside from getting a little screwed on currency and lack of liquidity?
The London listing is on the AIM, which is a fully regulated market operated by the London Stock Exchange
Are there any unusual tax consequences or stamp fees related to the share exchange and re-listing that you're aware of? I didn't see anything out of the ordinary but curious if you did
No stamp duty taxes should be payable on exchange of TP shares for new Dole Plc shares, according to the Transaction Circular document
Sorry if this is a stupid question, but is there any incentive to underprice the IPO, and how many shares do you think they will issue? If you have access to the IPO, do you think it will price above the current price of TP (should you buy shares now or wait for the IPO if you can buy at the IPO price)? Thanks in advance for any response.
Not at all, thanks for reading and commenting. The low valuation floor may well be to ensure the IPO is well subscribed to and the valuation floor is exceeded.
Based on the numbers in the Transaction Circular, my analysis indicates the post-IPO share count will be ~101m shares, with ~33m new shares to be issued in the IPO - I'll refer you to the Transaction Overview section, Step 2 for the workings behind this.
Regarding the IPO price, I think this will be above the current floor price indicated, and probably above the current TP-equivalent share price.
Conor - Thanks for the writeup. Trying to find interest expense on the new debt. Do you have a ballpark number? Looks like the old Dole debt was around 6%
Hi Mason, thanks for reading and commenting. Interest cost of the new debt is disclosed on p. 211 of the F-1 filed with the SEC last week. Per the F-1:
$600m RCF & the $300m TLA – priced at option of borrower as either LIBOR + 1.00% – 2.75%, or a base rate + 0.00% - 1.75%
$540m TLB – priced again at option of borrower as either LIBOR + 2.00%, with LIBOR floor of 0.00%, or a base rate plus 1.00%.
In each case, the final pricing will be determined by credit ratings and net leverage position.
Also, the TLA amortises at 2.5% of principal value annually, while TLB amortises at 1.0% of principal annually
Note the RCF is not expected to be drawn down at completion.
Hope this clarifies.
That's helpful, thank you.
Hi. Really great in depth analysis.
Do you know which will be the conversion rate of existing Total Produce shares to the new company? Each share will be converted to the new company?
Yes, per the Transaction Circular TP shares will be exchanged for new shares in Dole Plc at a ratio of 7 TP shares for 1 new Dole Plc share.
@Conor, where did you find the 7 to 1 (TP->DOLE) conversion?
Jose, its stated in both the Transaction Circular document - "Subject to the adoption of a mandatory share exchange mechanism by the approval of a scheme of arrangement
(the “Scheme of Arrangement”), the Board of Total Produce will be authorised to implement a share exchange
so that all shares in Total Produce will be exchanged for new shares in Dole plc on the basis of seven Total Produce
Shares for one Ordinary Share in Dole plc (the “Share Exchange”). "
Also stated again on p. 64 of the Amended F-1/A filing today - "We will acquire 100% of the issued share capital of Total Produce by implementing the Share Exchange. Pursuant to the Share
Exchange, we will issue one (1) of our ordinary shares to each Total Produce shareholder as of the record date specified by the board of
directors of Total Produce for every seven (7) Total Produce shares that are transferred to us, such that the Total Produce shareholders will
collectively own 82.5% of our ordinary shares on a fully diluted basis as of immediately following the Share Exchange and the Merger and
prior to this offering. "
Thanks for this information, and my most sincere congratulation for such a fantastic study case and detailed information!. I will follow the blog very closely in the future. Thanks a lot for your effort!
Great write-up really love this. Just echoing Eason's question. Is there a time gap between the de-listing and US IPO that we cannot trade the stock? And how do those mechanics work do the shares just sit in our account with no volume?
Thanks for reading and commenting Ben. I've now responded to Eason's question on the same point, but yes there is a time gap between TP de-listing and the IPO. Current TP shares are exchanged for new shares in Dole Plc via the scheme of arrangement, so I would expect these shares will sit in shareholders accounts but will not trade or be trade-able until the IPO completes.
Awesome, thank you!
Thanks for the writeup and for highlighting the situation. The phasing is a little unusual (what happens in the event of no IPO and what is the corporate governance of the private company you are holding in the interim?) but I'm yet to dig into the circular so hopefully there is some colour there! Almost makes you wonder whether a (backstopped) SPAC deal might have made sense for certainty, although with the scheme that is also quite complex.
Hi Alex, thanks for reading and your question. If the IPO does not happen, then the merger is terminated and the situation reverts back to current position as two separate companies, with TP remaining listed on the Euronext Dublin and continuing to own 45% of DFC. On your SPAC point, I think an IPO makes the most sense here, as a SPAC would likely add further complexity to an already complicated situation. I also think management would prefer a direct formal listing rather than the SPAC route.
Ah thanks for the clarification, so the scheme and delisting is conditional upon the IPO - didn't know that was possible for delisting (schemes are v. handy!) - will take a look at the circular myself when I get a chance.
Not wild on SPACs but they would have been able to guarantee listing at the price that is currently a distracting condition, although sector isn't maybe what SPAC investors get excited about. If I were a sponsor I might have thought this was an opportunity to deploy an ageing vehicle to facilitate a transaction whilst everyone is fighting over the unicorns - on first impression company looks a relatively straightforward underwrite for PIPE + credit too.