Call to postpone banana deal vote

The world’s leading investor advisory firm, Institutional Shareholder Services, has called for a postponement of a shareholder meeting aimed at approving the merger of Dublin-based banana distributor Fyffes and its US rival, Chiquita.

It emerged yesterday that Institutional Shareholder Services has urged Chiquita shareholders to adjourn their planned September 17 vote on the merger, in order to give the company’s board more time to consider other potential expressions of interest, with Brazilian juice maker, Cutrale, the main rival in the frame at present.

Chiquita and Fyffes shareholders are due to vote on the merger on the same day, with a completion of the deal expected by year end.

However, Institutional Shareholder Services said that the apparently declining market enthusiasm for the merger and a potential to realise “greater economic value through an alternative transaction” suggest support for the transaction, as currently structured, “is not warranted”.

It said an adjournment to encourage Chiquita’s board to engage with other bidders “appears to be the most robust option available” to its shareholders to pursue a potentially higher offer.

The proposed merger would create a global banana and fresh produce company with $4.6bn (€3.5bn) annual revenues and see Chiquita shareholders own 50.7%, with Fyffes’ backers owning 49.3%. Chiquita shareholders would receive one share in the new company for each of their existing ones, while Fyffes investors would get 0.1567 of a share for each of theirs.

Earlier this month, Chiquita rejected a $13 per share/$611m takeover offer from Cutrale and its Brazilian investment firm backer, Safra, saying the bid was inadequate.

Last week, Cutrale-Safra said Chiquita has misled its shareholders over the potential growth benefits from the Fyffes merger, adding that its offer represented “a riskless option” for Chiquita shareholders.

Fyffes and Chiquita recently jointly said that an additional $20m worth of merger synergies had been identified, taking to $60m the annualised pre-tax cost synergies from the transaction by the end of 2016.

Fyffes recently reported a 40% annualised increase in underlying adjusted pre-tax profit to €31m, although an €8.3m exceptional charge — linked with fees related to the merger — was taken.