Brazilian consortium Cutrale-Safra has won the battle to acquire Chiquita Brands International, announcing today it had entered a definitive merger agreement with the US banana producer.
The agreement comes days after Chiquita shareholders turned down the company's plans to buy Irish fruit supplier Fyffes.
The Brazilian bidders will pay $14.50 for each share of Chiquita, the companies said in a joint statement, valuing the company at about $682 million.
Talks about the deal began after Chiquita shareholders last week voted to reject their company’s proposed takeover of Dublin-headquartered Fyffes. Chiquita will now have to pay Fyffes a multi-million dollar termination.
Fyffes said that under the terms of its proposed merger, it “is entitled to a termination fee of 3.5 per cent of the total (market value) of Chiquita . . . should (it) enter into a separate transaction agreement within nine months”.
The break fee would be calculated on the value of Chiquita the day before it formally accepts any offer made by a rival bidder, such as Cutrale-Safra.
Chiquita chief executive officer Ed Lonergan said the board was pleased with the value and significant all-cash premium that has been delivered through the agreement with Cutrale-Safra.
“Through the due diligence process, we developed a tremendous amount of respect for the entire Cutrale-Safra team, especially their knowledge and understanding of global agribusiness, shipping and manufacturing,” he added.
Cutrale-Safra said it was pleased to make a long-term investment in Chiquita.
“It has impressive brand loyalty and recognition through its Chiquita and Fresh Express brands, providing the company with a strong competitive edge in the growing worldwide demand for high-quality fresh fruits and salads,” both companies said in a joint statement.
Under terms of the deal, shareholders of Chiquita will be paid $14.50 for each of their shares in cash. Cutrale-Safra will assume Chiquita’s debt, with Safra-controlled bank J. Safra Sarasin extending a buyback of the banana producer’s senior bonds due in 2021. The value of the deal, including debt, amounts to $1.3 billion.
The $14.50 per share consideration to be received by Chiquita shareholders represents a 33.8 per cent premium to Chiquita’s closing price on March 7, the last trading day prior to the announcement of Chiquita’s transaction with Fyffes.
The Chiquita-Fyffes combination would have created the world’s largest banana company. It also would have allowed Chiquita to relocate its headquarters to Ireland, which has a lower corporate tax rate.
Chiquita employs approximately 20,000 people and has operations in nearly 70 countries worldwide.
Additional reporting: Bloomberg
