Cutrale ponders juicier offer for Chiquita

Brazilian juice giant Cutrale is expected to return with an improved offer for US fruit producer Chiquita Brands, keeping the latter’s planned merger with Dublin-based banana distributor Fyffes in doubt.

Chiquita, yesterday, formally rejected this week’s unsolicited $611m (€458m) approach from Cutrale; and threw its weight behind the proposed Fyffes deal.

In a statement, Chiquita said Cutrale’s $13 per share bid was “inadequate” and not in the best interests of its shareholders, adding it would not be engaging with Cutrale and its investment firm backer, Safra, “at this time”.

“Chiquita remains committed to completing its transaction with Fyffes, which it believes will create a combined company that is better-positioned to succeed in a highly competitive marketplace,” it added.

However, in a swift response, the Brazilian bidders said they were “extremely disappointed” with the rejection and were now “considering all alternatives to provide shareholders with the opportunity to send a clear message to the Chiquita board that they should enter into discussions regarding the Cutrale-Safra proposal.”

“The rejection of the Cutrale-Safra bid, and the manner of their response, suggests the battle for control of Chiquita is not over yet,” said Patrick Higgins of Goodbody Stockbrokers. Bloomberg yesterday quoted Brett Hundley of US firm BB&T Capital Markets as saying that Cutrale/Safra will probably come back to the table with a higher offer for Chiquita.

“The Fyffes combination is worth $14-$17 a share, and the rival bidders need to offer something in that range. I think $15 gets the board’s attention,” he said.

While a successful Fyffes deal would see Chiquita re-domiciled in Ireland, that is not viewed as being the main attraction of the deal as the tax savings to the US firm would only be an estimated $5m per year. Both Fyffes and Chiquita are scheduled to put the plan to separate shareholder votes next month.