Di Giorgio Corporation
- 1996 Synopsis
2 Executive Drive
Somerset, New Jersey 08873
Telephone: (908) 469-4444 Fax: (908) 469-9151
Wholly Owned Subsidiary of DIG Holding Corp.
Incorporated: 1920 as Di Giorgio Fruit Company
Sales: $782 million Employees: 561
SICs: 5141 Groceries--General Line
Once a vast fruit-growing empire that owned
almost 50 square miles of California and Florida farmland, the Di Giorgio
Corp. became a conglomerate in the 1980s and, following a takeover and
restructuring in the early 1990s, emerged as a distributor of food products.
Di Giorgio distributes a variety of grocery products under the White Rose
brand name, primarily to the tri-state region of New York, New Jersey, and
The founder of the company, Giuseppe Di
Giorgio, was born in Cefalu, Sicily, in 1874. One of nine children born to a
small-scale vineyard owner and lemon grower, he arrived in New York in 1888.
After a few years working for a fruit jobber, the young man--now Joseph Di
Giorgio--moved to Baltimore and became a middleman himself. Borrowing money
from a bank, he founded the Baltimore Fruit Exchange in 1904. Eventually he
was to have a controlling interest in the Baltimore, New York, and
Pittsburgh fruit exchanges. In 1911 he bought the Earl Fruit Co., a
well-established California shipper.
Di Giorgio became a grower in 1918, when he
started to acquire land in Florida for growing citrus fruits. A year later
he bought 5,845 acres of land north of Arvin in California's southern San
Joaquin Valley for about $90 an acre. This was arid, saline scrubland, but
its owner, who established the Di Giorgio Fruit Co. in 1920, obtained water
by drilling wells hundreds of feet deep with powerful electric pumps and
began to plant trees and vines to grow apricots, grapes, and peaches. By
1929 the company had the largest fruit-packing plant in the nation. A branch
railway line serving Arvin was built to provide shipping facilities for Di
Giorgio and other fruit growers. The end of prohibition in 1933 enabled Di
Giorgio Fruit to expand grape production, and it took a sizable equity
position in California wineries, including its own Del Vista Wine Co.
By 1946 Di Giorgio Fruit occupied about 33
square miles in the San Joaquin Valley and was the largest grape, plum, and
pear grower in the world. It was also the second largest producer of wine in
the United States. Other crops grown there included potatoes and asparagus.
The company also held thousands more acres in the state, as far north as
Marysville (north of Sacramento) and as far south as the Borrego Valley,
near the Mexican border. In addition, the company held about 14 square miles
of land in Florida and was the largest producer of citrus fruit in that
state. Non-growing income (about ten percent of the total) came from
dividends from the fruit exchanges and minority interests in other fruit
auction companies, returns as a packer, loader, and commission merchant, an
Oregon lumber and box facility, and the winery. The corporation's annual
revenue rose from $5,7 million in 1938 to $18.2 million in 1946. In the
latter year, Joseph Di Giorgio and other family members owned 59 percent of
the corporation's common stock and a controlling portion of the cumulative
However, this vast farm empire began to
experience dramatic setbacks over the next 20 years. In the late 1930s and
early 1940s the water table under the major portion of Di Giorgio's
California properties sunk about 150 feet. To survive, the operation needed
federal irrigation water but was disqualified by the U.S. Bureau of
Reclamation, which restricted its services to individual recipients who
owned less than 160 acres--a limit Joseph Di Giorgio referred to as a
Labor unrest also played a part in Di
Giorgio's struggles. The corporation withstood a 1947-50 strike aimed at
union recognition for its farm workers, but in 1966 the company signed a
contract with Cesar Chavez's United Farm Workers Organizing Committee. Prior
to the settlement, civil rights activists had organized a boycott of Di
Giorgio grapes and other products.
Joseph Di Giorgio died in 1951. Among his
four nephews in high-level management, Robert Di Giorgio eventually came to
the fore. A graduate of Lawrenceville School, Yale University, and Fordham
Law School, Robert Di Giorgio's ambitions and management style contrasted
sharply to those of his uncle. Under the leadership of Robert Di Giorgio,
who became president in 1962, the corporation increased the nonagricultural
portion of its business from 15 percent in 1955 to 87 percent in 1964 and to
over 98 percent in 1967. "Fruit" was dropped from the company name in 1964,
the year its annual report described Di Giorgio as a "publicly held, profit
oriented processor, distributor and marketer of foods." The Florida citrus
holdings were sold in 1972, and by 1976 Di Giorgio owned only 2,500 acres of
farmland, in the Marysville area, which was soon sold in 1978. Another 6,000
acres of land in the Borrego Valley was retained for nonagricultural
During this time, the company began to
diversify its interests, and by the late 1960s the Di Giorgio Corp.
controlled 15 non farming subsidiaries. In the late 1950s Di Giorgio had
acquired S&W Fine Foods, TreeSweet Products, and the White Rose food
distribution business in greater New York. Serv-A-Portion, purchased in
1967, packaged packets of sugar, mustard, ketchup, and other condiments for
use by fast-food businesses and institutional cafeterias. Los Angeles Drugs
(LAD), acquired in 1968, distributed drugs, pharmaceuticals, and cosmetics
in southern California. Peter Carando, Inc., also bought in 1968, processed
Italian-style meats in New England. Acquired in 1969, Las Plumas Lumber Co.
raised the company's stake in West Coast timber production.
Di Giorgio's activities also included land
development for shopping centers, condominium apartments, recreational
areas, and mobile home parks. Investments and directorships tied the company
to such powerful California enterprises as the Bank of America, Pacific Gas
and Electric, and Southern California Edison. Assets reached $82.9 million
in 1965, while sales passed $100 million, ranking Di Giorgio ninth in rate
of sales growth among the nation's 500 leading corporations. Robert Di
Giorgio moved up from president to chairperson in 1971, while also remaining
chief executive officer.
By this time the company's White Rose
subsidiary was the largest independent wholesale-grocery distributor in the
greater New York area. TreeSweet was processing and marketing citrus juices
in Europe as well as the United States, while the Serv-A-Portion subsidiary
marketed small containers of jams, jellies, and sugar in Europe. An
international subsidiary bottled Sunland juice products in Belgium for
distribution in European supermarkets and food stores, and DG Leisure
Products was building and distributing campers and travel trailers made by
Di Giorgio factories in California and Michigan. A California subsidiary was
making machines used in peach canneries to extract pits. Precut housing
components and wood chips were being exported to Japan from sawmills in the
Like many other conglomerates of that era, Di
Giorgio eventually proved to have taken on more than it could handle. After
the national economy fell into recession in late 1973, the company suffered
its first loss in 1974 since the 1930s, $3.1 million. Corporate earnings
totaled $24.8 million in 1975, but $9.6 million was paid out in interest on
the corporation's heavy debt, which included $70 million in long-term debt.
Net earnings for the year came to only $630,000.
By 1979 Di Giorgio's annual sales were
approaching $1 billion. However, a reviewer in the New York Times
article described Di Giorgio as "an association of marketing men looking for
something to sell," meaning that the company still lacked focus. "We went
into a rush program of acquisitions," Robert Di Giorgio later conceded,
observing that "when you do that, you make some very good ones and some bad
ones. Fortunately, there were more good ones than bad ones, but we made some
mistakes." These mistakes included money-losing units that manufactured
plastic tableware and wrought-iron and aluminum furniture. As a result, the
corporation sold off peripheral businesses, including the sawmills and
recreational vehicles, reducing its subsidiaries from 28 to 18. Of the
company's 1978 revenue of $897.1 million, 44 percent came from the
corporation's building materials division, 32 percent from the food
distribution division (which included drugs), 14 percent from the food
processing division, and ten percent from automotive accessories.
Among the company's problems, according to
some analysts, was uncertainty over its future course. In 1980, as Robert Di
Giorgio approached his seventieth birthday, investors (disappointed with the
corporation's overall earnings of only $11 million on sales of $1 billion)
wondered if a successor would be able to rein in the 15 powerful divisional
presidents. Allowed great autonomy under Di Giorgio, most of them had been
owners of the acquired businesses they continued to manage. In some cases
they had sold their businesses for Di Giorgio stock and had thus become
large shareholders. Di Giorgio stepped down as chairperson in 1982 and was
succeeded by Peter Scott, who also remained president. However, Di Giorgio
remained to chair the board's executive committee.
In 1983 Di Giorgio's building materials
sector opened two new facilities, a California plant for precut,
preassembled lumber, and a Denver facility for extruding aluminum used in
doors, windows, and panels. White Rose continued to be the company's most
profitable unit, while Allied Distributing Co., a distributor of electronics
products, was reported to have invested too heavily in the glutted video
game market. Also during this time, a major luxury resort development in
Borrego Springs overseen by Di Giorgio began operations.
A restructuring program was adopted in 1984,
a year in which the corporation's stock fell 98 cents a share. Sun Aire, a
California commuter airliner, was sold to Skywest Airlines. Also sold that
year were TreeSweet, Allied, and real estate, other than Borrego Springs
previously held for development. By August 1985 Di Giorgio's was profitable
again, and its stock had rebounded from a low of under $10 a share in late
1984 to more than $16 a share. The following year the Los Angeles Drug Co.
(LAD) was sold for about $40 million.
Would-be corporate raiders started putting Di
Giorgio "in play" during 1986. First, Kane-Miller Corp. acquired a 9.4
percent stake in the company but then backed off and sold some of those
shares. Later in the year, Mario Gabelli raised his holdings to 11.2 percent
of the stock. Although Gabelli initially denied that he would attempt to
take over Di Giorgio, he did remark that food companies were prone to
buyouts because of undervalued assets and attractive cash flow. By
September, the company's stock had risen to $25 a share.
By July 1987 Gabelli Group Inc. owned 28.6
percent of Di Giorgio's common stock, which had reached $31 a share. After
two partnerships related to the Gabelli Group made an unsolicited $238
million leveraged buyout offer for Di Giorgio, the company management
adopted a "poison pill" defense. Under this plan, each share was issued the
right, in the event of a takeover or merger, to be exchanged for twice its
value in the stock of the surviving company. In addition, shareholders not
belonging to a person or group holding 30 percent of the common stock
received the right to buy company shares at half price. In early 1988 Di
Giorgio enacted a $70 million, $21-a-share buyback offer, ultimately buying
about 41 percent of the outstanding shares.
To help pay for the buyback, the management
sold five divisions, including Serv-A-Portion, the Belgium-based
international food processing subsidiary, an aluminum products division, and
the land development unit. These transactions brought in $122 million and
left Di Giorgio to focus on two lines of business: food processing and
distribution and building materials.
New Jersey native Arthur M. Goldberg became,
in February 1989, the fourth investor in less than three years to buy more
than five percent of Di Giorgio's stock and seek control. Goldberg had
previously attempted to take over Di Giorgio in 1984 but had sold his stock
when the price rose. A former trial lawyer and an active investor in
medium-sized companies, Goldberg had a history of taking quick profits,
sometimes in the form of "greenmail," the name given to a company buyback of
a raider's shares at a premium price. Goldberg's investments reportedly had
earned $80 million for himself and his partners. He denied being only
interested in speculative profits, however, telling a San Francisco
Chronicle reporter, "I've tried to always build companies, rather than
tear them down.... In all the situations I've been in, all the stockholders
have done very, very well."
Di Giorgio's management rejected a
$30-a-share offer from Goldberg in June 1989. He owned 13 percent of the
corporation's stock in August, when he made a tender offer of $32 a share to
the stockholders, which was reduced to $30 a share in December. The bid,
estimated to be worth $154 million, was managed by New York's Bankers Trust
Co., which stood to gain as much as $10 million by providing a bridge loan,
underwriting the subordinated debt, and handling the sale of some of Di
Giorgio's units. By the end of the year Goldberg's DIG Acquisition Corp., a
unit of Rose Partners L.P., in which he was the only general partner, held
or had been tendered at least 75 percent of Di Giorgio's shares.
Goldberg took control of Di Giorgio in
February 1990, becoming its chairperson, president, and chief executive
officer. Also during this time, he became chairperson and chief executive
officer of Bally Manufacturing Corp., the casino and health-club operator.
Di Giorgio's headquarters were moved from San Francisco to Somerset, New
Jersey, the base for Goldberg's investment partnerships. Of Di Giorgio's
remaining five divisions, all except White Rose were sold by 1994.
Early that year a competitor, the Fleming
Companies, Inc. of Oklahoma City, indicated that it had signed a letter of
intent to sell most of the assets of its Royal Foods dairy and delicatessen
products business in Woodbridge, New Jersey, to Di Giorgio. Terms were not
disclosed. This operation had revenues of about $300 million in 1993,
bringing Di Giorgio's combined annual revenue to about $1.1 billion.
White Rose Corp
Beckett, Peter, "Goldberg Finishes Buying Di Giorgio," San Francisco
Chronicle, February 10, 1990, p. B3.
Beckett, Peter, "The Man Who Wants to Control Di Giorgio," San Francisco
Chronicle, March 6, 1989, pp. C1, C6.
Campanella, Frank W., "A Much Better Year," Barron's, August 5, 1985,
"Di Giorgio Seeking Its Niche," New York Times, April 19, 1979, pp. D2,
Galarza, Ernesto, "Big Farm Strike, Commonweal, June 4, 1948, pp.
Galarza, Ernesto, Spiders in the House & Workers in the Field, South
Bend, Ind.: University of Notre Dame Press, 1970.
"Heir Apparent Difficulties at Di Giorgio," Business Week, October 27,
1980, pp. 172L-172M.
"Joseph Di Giorgio," Fortune, August 1946, pp. 97-103, 205-208.
"On the Rebound," Barron's, October 10, 1983, pp. 55, 57.
Pender, Kathleen, "Pursuing Di Giorgio, San Francisco Chronicle,
February 10, 1989, pp. C1, C20.
Richards, Art, "Spotlight on Di Giorgio Corp.," Journal of Commerce,
June 3, 1976, pp. 2, 5.
"Vast Di Giorgio Farm Empire Nearing End After Many Woes," New York
Times, December 25, 1968, pp. 51-52.
Source: International Directory of Company
Histories, Vol. 12. St. James Press. 1996