Chiquita to Move on Fyffes After Rejecting Buyout OfferJack Kaskey
Chiquita Brands International Inc. will proceed with its 352 million-euro ($449 million) bid to buy rival banana producer Fyffes Plc after rejecting a higher takeover offer from Brazil’s Cutrale Group and Safra Group.
The Cutrale-Safra bid of $14 a share for Chiquita, raised from an initial $13, is “inadequate,” Charlotte, North Carolina-based Chiquita said in a statement after the close of trading yesterday.
A combination of Chiquita and Fyffes would create the world’s biggest banana producer and have a per-share value of as much $20.01, Chiquita said. Its shares fell 1.8 percent to $13.36 at the close of trading in New York.
“It seems to us that Cutrale-Safra isn’t really interested in paying a competitive price for Chiquita, instead choosing to find ways in which it can persuade shareholders into taking a low bid,” Brett M. Hundley, a Richmond, Virginia-based analyst at BB&T Capital Markets who recommends buying Chiquita shares, said in a note today.
Cutrale, a closely held fruit juice company controlled by Jose Luis Cutrale, and banks controlled by Joseph Safra, Brazil’s second-richest man, are trying to derail Chiquita’s plan to buy Fyffes, a deal that was announced in March.
The Chiquita-Fyffes transaction would allow Chiquita to relocate its headquarters to Ireland, which has a lower corporate tax rate. Last month, the U.S. Treasury Department announced steps that will make it harder for U.S. companies to move their addresses outside the country to reduce taxes.
Also in September, Proxy adviser Institutional Investor Services Inc. recommended Chiquita investors reject the Fyffes deal and instead pursue a buyout from Cutrale-Safra.
In its statement yesterday, Chiquita said shareholders can’t be sure a Cutrale-Safra deal will still be on the table if they vote on Oct. 24 against buying Fyffes.
Cutrale and Safra said today in a statement that their offer is binding through Oct. 26 and they’re open to continued talks. A Chiquita-Fyffes combination is worth only $9 to $12 a share, Cutrale-Safra said.
Fyffes traded at 98.8 euro cents at 4:11 p.m. in Dublin. Chiquita’s all-stock offer is currently valued at 1.17 euros a share, according to data compiled by Bloomberg.
The latest Cutrale-Safra bid is valued at $1.24 billion including the assumption of Chiquita’s net debt, according to data compiled by Bloomberg.