Dimon Inc. said Thursday it is selling its flower business, Florimex Worldwide, to USA Floral Products Inc. for $90 million.
Danville, Va.-based Dimon announced in January that it wanted to sell Florimex to focus on its core business of vending tobacco leaf. Dimon is the world's second largest tobacco leaf merchant, with $2.5 billion in annual sales. It buys leaf from auctions and markets, then sells to cigarette companies. Proceeds from the Florimex sale will be earmarked to slash debt Dimon took on to buy rival tobacco merchant Intabex in 1997, CEO Claude Owen said in a statement. Florimex generated about 15 percent of Dimon's annual revenues in 1997. Wall Street had little reaction to the announcement, as Dimon's stock rose to 11 7/16 on Thursday. For Washington-based USA Floral, the purchase makes it the world's largest distributor of floral products with anticipated revenues of $1 billion. Florimex is the biggest international vendor of fresh-cut flowers, with overseas headquarters in Nuremberg, Germany. Shares in Dimon have tumbled this year, retreating 58 percent. Analysts have said the Asian currency crisis and sluggish domestic orders have hurt the company, as has an overall negative trend in the tobacco industry. Dimon's core business is American blend tobacco, which is growing at up to 4 percent a year. Its domestic customers include Lorillard Tobacco Co. and R.J. Reynolds Tobacco Co., but the majority of its business is done overseas. The proposed sale, expected to close by Sept. 30, provides Dimon with $66 million in cash, with USA Floral assuming Florimex's net debt of $24 million. Florimex was expected to have fiscal 1998 sales of $400 million and an operating profit of $9.2 million. Dimon was formed by the 1995 merger of Dibrell Brothers and Monk-Austin. Florimex was purchased by Dibrell in 1987.