Fyffes raises the stakes in proposed Chiquita merger

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Fyffes raises the stakes in proposed Chiquita merger

Irish produce company Fyffes Plc (ESM: FFY) is pulling out all the stops to get U.S.-based Chiquita Brands International (NYSE: CQB) shareholders to choose a merger between the two entities over an acquisition bid from Brazil's Cavendish Global Limited. Bananas panorama

Cavendish, a subsidiary of Cutrale Group and Safra Group, is offering US$611 million for Chiquita, which represented a 30% premium on the market price when the proposal was made in August.

At the time, the boards of Chiquita and Fyffes were gearing up for a merger that would see U.S. company's shareholders get 50.7% under the new entity.

The Brazilians have aggressively sought to persuade shareholders their offer is the better deal. Until recently, the two entities' best response had been an announcement the merger would bring US$20 million in synergies not previously recognized.

But that clearly wasn't enough. Today, the two companies announced a new arrangement whereby Chiquita shareholders would get 59.6% in the merged group ChiquitaFyffes.

The companies have also agreed to increase the termination fee payable to Fyffes from 1% to a more customary 3.5% of the total value of the issued share capital of Chiquita if the combinaion is terminated.

"We are pleased with the increased value that these enhanced terms for Chiquita bring to our shareholders," said Chiquita CEO Ed Lonergan.

"The Fyffes transaction is a natural strategic partnership that brings together two complementary companies to create a combined company that is better positioned to succeed in a highly competitive marketplace, while driving strong performance and value for shareholders as well as immediate benefits for customers and consumers worldwide."

Fyffes executive chairman David McCann described the proposed combination as "strategic and compelling", to create the world's number one banana company with synergies that can only be achieved by these companies joining forces.

"This revised binding agreement, along with the additional synergies recently announced, reinforces our conviction that the Combination is the value-maximizing opportunity for both companies' shareholders," McCann said.

www.freshfruitportal.com

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