Fyffes’ management has vowed the Dublin company will remain at the forefront of the global produce industry, despite its proposed $1bn (€789m) merger with US banana rival, Chiquita Brands, collapsing.
Although Chiquita continued to recommend its link-up with Fyffes to its shareholders – instead of a rival offer from Brazilian consortium, Cutrale-Safra – the New York-listed company’s investors voted to reject the deal at the company’s AGM yesterday.
Chiquita will now re-enter talks with the Brazilians over a proposed deal. Thursday saw Cutrale-Safra increase its bid for Chiquita for a second time, to $14.50 per share, valuing the US firm at around $682m.
Chiquita had said that even those terms were not superior to its Fyffes proposal, which it said valued an enlarged entity at between $15.46-$20.01 per share.
Although some prominent shareholder advisory services – including leading firm, Institutional Shareholder Services (ISS) – had backed Cutrale-Safra’s cause, many analysts had still expected the Fyffes deal to win out.
That deal had already cleared regulatory hurdles, with the European Commission recently sanctioning the merger and terms had been revised, effectively offering Chiquita shareholders a sweeter deal than previously.
Fyffes’ own shareholders were due to vote next week on the merger, but that meeting has now been cancelled.
Prior to yesterday’s Chiquita AGM, Patrick Higgins of Goodbody Stockbrokers suggested that while an update from ISS and the increased offer from Cutrale-Safra could swing the vote away from Fyffes, he believed the merger still offered investors more value.
After formally terminating its agreement with Fyffes – which would have produced the world’s largest banana supplier – following yesterday’s shareholder meeting, Chiquita’s board said it remained “convinced” that Fyffes would have made a strong merger partner, but would now go forward as competitors rather than partners.
In a bullish statement, Fyffes’ executive chairman, David McCann said that the company will remain a global industry leader, despite this setback.
“Fyffes remains the leading European banana company, with turnover in excess of €1bn and a long and successful history of growth,” he said.
“Fyffes’ management team has a proven superior track record of delivering shareholder value, as demonstrated by our consistently strong results in recent years and solid balance sheet.”
He added: “We are confident Fyffes will remain at the forefront of the global produce industry.
“We will continue to focus on successfully developing our business for the benefit of all stakeholders,” he added.
Fyffes’ share price – which has fallen by nearly 26% in the past six months – dipped by 5.15%, in Dublin, yesterday, to a price of 94c.
Fyffes could, however, come away with something in the end.
Should Chiquita enter into a separate transaction agreement within nine months, the Irish company is entitled to a termination fee of 3.5% of the total closing value of the US firm’s issued share capital the day prior to such an agreement.
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