Fyffes agrees revised merger terms

Irish banana producer Fyffes yesterday announced it had agreed to a new merger proposal with Chiquita which would see it receive a smaller share of the newly-combined company.

The rival fruit firms agreed to revise the terms of the merger, giving the US company a larger slice of the deal, in a bid to stave off interest in a rival bid from Grupo Cutrale and Safra Group — a Brazilian competitor.

Under the revised deal, Chiquita investors would own 59.6% of the combined business, compared with 50.7% when terms were first detailed in March, the companies said yesterday; leaving the Irish firm with a slightly greater than 40% share.

The combination to create the world’s largest banana company would be worth about €866m, based on current share prices.

Commenting on the deal, Merrion Stockbrokers economist, David Holohan, said: “While the proposed combination of the companies is now more skewed towards benefiting Chiquita shareholders in terms of ownership of the combined entity, the merits of the deal continue to be highly attractive for all involved parties, given the significant synergies that can be achieved.

“We believe that the change of terms is likely in response to Chiquita shareholders that believed they were receiving too little ownership of the combined entity.

“However, the new terms... should entice Chiquita shareholders who were leaning towards a cash offer from Cutrale,” he said.

Cutrale Group and Safra Group made an unsolicited €483m bid for Chiquita in August. Chiquita postponed a shareholder vote this month on its plan to buy Dublin-based Fyffes, which granted it a waiver to talk with Cutrale and Safra.

The companies agreed to raise the termination fee payable to Fyffes to 3.5% of the total value of Chiquita’s issued share capital should the merger fail in certain circumstances.

As part of the new agreement, Fyffes shareholders will receive 0.1113 ChiquitaFyffes shares for each Fyffes share they hold.

Fyffes chairman David McCann would become chief executive of the combined company.

Chiquita is still in talks with Cutrale and Safra, and will inform shareholders if it receives a revised proposal, it said yesterday.

* Additional reporting Bloomberg