Fyffes-Chiquita merger ‘more likely to happen’

Fyffes’s proposed merger with US fruit producer, Chiquita Brands is looking more realistic after the latter rejected an improved takeover offer from Brazilian consortium, Cutrale- Safra.

Earlier this week, the Brazilians — made up of juice-maker, Cutrale and investment firm, Safra — increased their rival bid for Chiquita from $13 per share to $14 per share, valuing a deal at around $660m (€516m).

However, Chiquita said yesterday that after careful review, it considered the new offer “inadequate and not in the best interests of Chiquita share-holders”.

“The Cutrale-Safra offer, in our judgment, is not a compelling alternative to Chiquita-Fyffes, as it limits the ability of Chiquita shareholders to realise the long-term value inherent in a combination of Chiquita and Fyffes; particularly the recently improved exchange ratio and synergies,” Chiquita’s management said in a letter to the Brazilian consortium’s representatives.

Chiquita will continue to recommend the Fyffes merger to its shareholders up to their vote on the matter later this month.

Fyffes — whose own shareholders are also set to vote later this month — said, earlier in the week, that the merger proposals remained the superior offer to Chiquita’s shareholders.

In its response, yesterday, Chiquita reiterated its view that the Fyffes merger has the potential to deliver values “significantly greater” than $14 per share.

“Chiquita is in the midst of a turnaround and is also about to close on a combination with Fyffes that would create a leading global produce company with financial flexibility, significant cash flows and a more efficient capital structure,” it said.

“The board continues to strongly believe in the strategic merits and value provided by the revised Chiquita-Fyffes transaction, given the revised exchange ratio.

“With updated projections, revised synergy estimates and receipt of all necessary regulatory approvals, we believe the Fyffes transaction is meaningfully more valuable for Chiquita shareholders,” the American company added.

The terms of the merger were recently altered — giving Chiquita a 59.6%, instead of 50.7%, share of the proposed new entity. Additionally, the European Commission has cleared the merger proposal, effectively removing any lingering regulatory barriers to a deal being concluded before the end of this year.

In response to the Chiquita decision, Cutrale- Safra said the US firm was “turning a blind eye” to the best interests of its shareholders and continuing its “track record ofvalue destruction”.

“The Chiquita board, through its actions, has demonstrated that its true objective is not serving the best interest of Chiquita shareholders, but rather entrenching itself through the Fyffes transaction,” the Brazilian bidder added.

Analysts now firmly believe the Fyffes deal will proceed.

“It will be back to the drawing board for Cutrale-Safra as they still have some time to re-access their offer for Fyffes but the probability of a merger between Chiquita and Fyffes is certainly higher now than before as the Chiquita board remains fully behind a Fyffes deal,” said David Holohan of Merrion Stockbrokers.


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