Fyffes shares plunge over merger doubts

Shares in Dublin-based fruit giant, Fyffes plummeted over 20% at one point yesterday after its intended merger with Chiquita Brands was thrown into jeopardy, with the latter receiving an unsolicited $611m takeover offer.

The planned Fyffes-Chiquita merger — announced earlier this year — was set to create the world’s largest banana supplier.

Juice maker Cutrale Group and Safra Group revealed yesterday in a statement that they were offering $13 a share for North Carolina-based Chiquita. The proposal is 29% more than Chiquita’s closing share price on Friday and isn’t subject to financing conditions, the companies said.

The proposed bid jeopardises the Fyffes merger that would lower Chiquita’s tax bill by moving its headquarters from the US to Ireland. Cutrale, a privately -held company controlled by Brazil’s José Luis Cutrale, is partnering with banks controlled by Joseph Safra, Brazil’s second-richest man, to challenge the Fyffes tie-up.

“To have a new bid at such a high premium come out of left field is quite surprising,” David Holohan, an analyst at Merrion Capital in Dublin, said. “The market clearly is attributing value to the new bid as opposed to the old tie-up between Fyffes and Chiquita.”

Chiquita’s share price jumped by over 31% on the back of the news, while that of Fyffes, closed down 14% to 92c in Dublin, after earlier plunging 21%, the biggest intraday drop since August 2008.

Cutrale controls more than one-third of the $5bn orange- juice market, and also operates in markets for apples, peaches, lemons and soybeans.

“This platform offers Chiquita extensive experience in all aspects of the fruit and juice value chain,” Cutrale and Safra said.

Safra has more than $200bn worth of assets under management and operates banks in North America, South America, Europe, the Middle East and Asia. “If we are able to proceed on a timely basis with due diligence and discussions, we will be in a position to close the transaction before the end of the year, within the same timeframe you have indicated for the Fyffes transaction,” Cutrale and Safra said in a letter to Chiquita’s management.

The Chiquita-Fyffes deal, which was announced in March, would bring together two of the world’s oldest fruit importers.

— Bloomberg