Shares in Fyffes soared to their highest in seven years
after the Irish tropical fruits group revealed a takeover by rival Chiquita, to
create a $1.1bn produce giant, by far the world's top banana distributor.
Irish-based Fyffes - the oldest fruit brand in the world,
with a history dating back to the 19th century - agreed to an all-stock
purchase valuing it at $526m, or E1.22 a share, a 36% premium to the closing
price on Friday.
The deal will create a company, called ChiquitaFyffes, which
will represent "leading global produce company with approximately $4.65bn in
combined annual revenues and a presence in key markets around the world".
ChiquitaFyffes will boast sales of more than 160m cases of
bananas a year, besides boasting "stronger positions" in the melon and
pineapple markets, where Fyffes is already a force, and a "significant presence" in packaged salads too.
It will also boast more than 24,000 hectares in owned or
leased Central American plantations, growing the likes of melons, and employ
some 32,000 people.
The takeover was heralded by Ed Lonergan - the chief executive
of US-based Chiquita, who will become chairman of the combined group - as a "natural
strategic partnership", between "two complementary companies".
David McCann, the Fyffes chief executive, who will take the same
position at ChiquitaFyffes, said that the "transformative" deal would create a
combined group "which is well positioned to succeed... and which will create
significant value for our shareholders".
The deal will offer benefits of at least $40m a year, half
through cutting back on duplicated management and administration, and half in realising
logistical, packaging and procurement efficiencies.
ChiquitaFyffes, while listed in New York, will be based in
Dublin, enjoying Ireland's competitive tax rates.
However, the tie-up is conditional on factors including approval
by holders of 75% of Fyffes shares, and on anti-trust approval.
In world banana distribution, Chiquita already ranks top - with
volumes of 125m cases a year, ahead of Fresh Del Monte with 117m cases – and will
gain an extra 55m tonnes through a Fyffes deal.
Mr McCann, however, underlined that the groups operated in a
"highly competitive marketplace".
Rival Dole Foods last year agreed to a takeover valued at $1.5bn,
including debt, by its chairman and chief executive David Murdock, after in
2012 launching a strategic review which proposed asset sales, and heralded the $1.7bn
sale of its global packaged foods and Asian fresh produce businesses to Japan's
Fyffes separately on Monday revealed a 6.9% rise to E32.7m
in its earnings before interest, tax and amortisation (ebita) for 2013, on
revenues up 6.3% at E1.08bn.
Earnings rose by 3.2% to 8.82 euro cents per share.
The ebita result was towards the upper end of the target of
E27m-32m that the group had guided to.
The company said that the increase in turnover was driven by
"further organic growth in the group's banana and melon categories, combined
with price inflation in the banana and pineapple categories, reflecting higher
Fyffes shares hit E1.169 in morning deals in Dublin, the
highest since March 2007.