Chiquita Brands, Fyffes Plc agree to revised merger terms
26 September 2014
Chiquita Brands International Inc and Fyffes Plc have agreed to merge according to a new revision that gives Chiquita a larger share of the combined company, Bloomberg reported.
Chiquita investors would own 59.6-per cent of the combined business, up from the 50.7-per cent when terms were first outlined in March (See: Banana suppliers Chiquita and Fyffes to merge in $1.07 bn deal).
The merger would create the largest banana company in the world worth around $1.1 billion, based on current share prices.
In August 2014, North Carolina-based Chiquita received an unsolicited $614-million bid from Brazilian juice maker Grupo Cutrale and
Brazilian-Swiss private bank Safra Group.
Chiquita postponed a shareholder vote this month on its planned acquisition of Dublin-based Fyffes, which granted it a waiver to talk to Cutrale and Safra.
David Holohan, an analyst at Merrion Capital in Dublin, said in an email, that a combination of Chiquita and Fyffes was in the interests of both parties. ''While the revised terms are more advantageous to Chiquita shareholders should the deal close, the increased break clause of the transaction value is material to Fyffes should it fail to do so.''
The companies agreed to hike the termination fee payable to Fyffes to 3.5 per cent of the total value of Chiquita's issued share capital, in the event of the failure of the merger in certain circumstances.
In the event of the proposal receiving approval by both boards, the share of Chiquita would increase to 59.6 per cent from 50.7 per cent of the combined company, which would be worth just under €976 million based on the closing prices of the two firms yesterday, Reuters reported.
Chiquita chief executive officer Ed Lonergan said that the company was pleased with the increased value that these enhanced terms of Chiquita brought to the company's shareholders.
If the merger were to come about, the merged company would have a 14 per cent share of the $7 billion global banana market, giving it significant clout in negotiating with retailers.
According to the statement, Chiquita and Fyffes planned to delay shareholder meetings to approve the revised deal until late October.
Chiquita and Fyffes, with rivals in Fresh Del Monte and Hawaii-founded Dole Food Company, were moving towards a conditional EU approval for the tie-up, according to sources who spoke to Reuters this week.