Advisory firms clash over ChiquitaFyffes deal - FreshFruitPortal.com

Advisory firms clash over ChiquitaFyffes deal

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Advisory firms clash over ChiquitaFyffes deal

With Chiquita Brands International (NYSE: CQB) shareholders due to vote on the proposed merger with Ireland-based Fyffes Plc (ESM: FFY) in just a couple of days' time, a leading advisory firm has now come out in favor of the Brazilian takeover. 6661801817_8c2dbc016c_z

Glass Lewis yesterday recommended Chiquita shareholders to vote against the Fyffes deal, saying the U.S. banana company's board relied on valuations unsupported by market trends and 'questionable methodologies' intended to undermine the perceived value of a bid by two Brazilian firm.

The Cutrale Group and the Safra Group last week increased their offer to US$14 share, in a move that was later rejected by Chiquita.

The development comes one day after another influential proxy advisory group Institutional Shareholder Services (ISS) unexpectedly changed its tune, urging shareholders to support the ChiquitaFyffes deal and disregard the Brazilian all-cash offer.

A statement from Glass Lewis listed its reasons for not supporting the Fyffes deal.

"Given concerns regarding procedural concessions, a pervasive disparity between the board's presentation of value and the value of Chiquita in the market, and the lack of clearly attractive financial terms in the proposed agreement, we believe shareholders would be best served rejecting the [Fyffes] proposal," the statement said.

"The Chiquita Board's analysis reflects a continuing and perplexing failure to acknowledge the indisputably significant and long-term gap between the board's value creation position and Chiquita's actual value in a heavily-traded, well-informed marketplace.

"Under the circumstances, we expect shareholders may reasonably be left questioning whether the amended Fyffes transaction ... represents an opportunity so compelling as to soundly preclude exploration of any other alternatives."

Cutrale-Safra also said in a statement its US$14 per share offer provided Chiquita shareholders with a 'superior and compelling alternative'.

"It represents a highly attractive approximately 19% premium to the adjusted stock price of [US]$11.80, the value of Chiquita shares based upon the revised Fyffes transaction," Cutrale-Safra said.

"Moreover, the proposed cash consideration of the Cutrale-Safra offer, including the assumption of Chiquita net debt, represents a multiple of approximately 12.4x EBITDA for the twelve months ended June 30, 2014.

"The Cutrale-Safra definitive offer is the highest comparable transaction multiple for an acquisition of this scale in the fresh produce sector based on the EBITDA multiples of comparable transactions."

In response to the development, Chiquita president and CEO Edward Lonergan said the Board of Directors was solely focused on maximizing value for all company shareholders,

He also claimed that, in contrast, Cutrale-Safra 'appeared only interested in acquiring Chiquita for the lowest possible price without adequately compensating Chiquita shareholders'.

Chiquita shareholders are due to vote on the proposed merger with Fyffes on Friday (Oct. 24).

Photo: Phil Dokas, via Flickr Creative Commons (modified)

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