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Chiquita Revises Fyffes Bid After Cutrale-Safra Approach

Published on Sep 28 2014 3:39 PM in Food

Chiquita Revises Fyffes Bid After Cutrale-Safra Approach

Chiquita Brands International Inc. secured more favourable terms for a proposed acquisition of rival banana producer Fyffes Plc as it tries to fend off an unsolicited takeover approach from a Brazilian group.

Chiquita investors would own 60 per cent of the combined business, compared with 51 per cent when the all-stock deal was first announced in March, the companies said. They also agreed to increase the fee Fyffes would receive if the merger is scrapped.

The €375 million deal to create the world’s largest banana company was thrown into doubt last month after Cutrale Group and Safra Group made an unsolicited $614 million joint bid for North Carolina-based Chiquita. Dublin-based Fyffes subsequently allowed Chiquita to talk with Cutrale and Safra.

A combination of Chiquita and Fyffes is in the interests of both parties, said David Holohan, an analyst at Merrion Capital in Dublin.

“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,” he said.

The fee payable to Fyffes should its deal be terminated under certain conditions is 3.5 per cent of Chiquita’s share capital, compared with 1 per cent previously.

Meeting Adjourned

Cutrale-Safra is proceeding with due diligence on Chiquita and expects to make a new offer “as expeditiously as possible.” The revised Chiquita-Fyffes deal values the combination of the two companies at $11.82 a share, less than the Cutrale-Safra offer of $13, the Brazilian bidders said.

Chiquita also said it adjourned a meeting of shareholders to vote on the Fyffes deal to 24 Oct. from 3 Oct. Fyffes is seeking to adjourn a court meeting and investor meeting to 28 Oct. from 3 Oct.

As part of the new agreement, Fyffes shareholders will receive 0.1113 ChiquitaFyffes shares for each Fyffes share they hold and Chiquita investors will get one ChiquitaFyffes share for every Chiquita share.

Tax Inversion

While ChiquitaFyffes would domicile here, making it a tax inversion deal for Chiquita, the potential for tax savings isn’t one of the main reasons for the transaction, said Holohan.

“The deal is not driven by tax treatment,” he said. “The company will be led by Fyffes executives that are based in Ireland and for numerous reasons, including taxation, it is sensible to domicile the company here.”

Fyffes Chairman David McCann would become chief executive officer of the combined company.

Chiquita has said that it is still in talks with Cutrale and Safra, and will inform shareholders if it receives a revised proposal.

Bloomberg News, edited by Hospitality Ireland

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