U.S. fruit firm
Chiquita Brands International Inc
) has signed a definitive agreement to buy Irish rival Fyffes Plc
for about 379 million euros ($526 million). The combination of
Chiquita and Fyffes will create the world's biggest supplier of
bananas. The deal is expected to be complete before the end of
2014 subject to the approval of Fyffes and Chiquita shareholders
and the High Court of Ireland.
Chiquita is a leading international marketer and distributor
of nutritious and high-quality fresh food products, including
bananas, packaged salads and healthy snacks and has operations in
70 countries, including the U.S. On the other hand, Fyffes is a
leading international marketer and distributor of top quality,
healthy tropical produce, with operations in Europe, the U.S.,
Central America, South America and Asia. The deal is thus a
strategic fit for both the companies as it will bring together
two of the world's highly renowned and oldest fruit importers to
form the leading global banana and other fresh produce
The combined company will be named as ChiquitaFyffes Plc and
will be listed on the New York Stock Exchange and domiciled in
Ireland. The combined entity will be valued at about $1.07
billion and will generate approximately $4.6 billion in annual
revenues. It will also provide substantial operational
efficiencies and cost savings of at least $40 million by the end
Fyffes shareholders will get 0.1567 a share in the new company
for each Fyffes share, while Chiquita holders will receive one
ChiquitaFyffes share for each Chiquita share they hold. Upon
completion of the transaction, Chiquita shareholders will own
approximately 50.7% of ChiquitaFyffes, while Fyffes shareholders
will hold the remainder on a fully diluted basis. Post the deal,
both the companies will continue to maintain their brands.
The combined entity will have greater access in the worldwide
market and can more effectively utilize its geographical
footprint, expand in the high growth emerging markets and expand
its distribution channels. Along with bananas, ChiquitaFyffes
will supply melons, pineapples and packaged salads to more than
70 countries. The combined company will have a workforce of
approximately 32,000 globally.
Chiquita's chief executive officer (CEO) Ed Lonergan will
become the chairman of ChiquitaFyffes, while Fyffes' chairman
David McCann will become CEO of the combined company.
Of late, Chiquita has been struggling with the supply and
pricing of its raw products. This Zacks Rank #5 (Strong Sell)
company faced a large oversupply of bananas in fourth quarter
2013, which negatively impacted the trading markets globally. In
the salad business too, Chiquita suffered from iceberg supply
shortages in the early fourth quarter and experienced an
oversupply of raw salad products later in the quarter as a result
of harsh weather across the growing regions.
Despite the challenges, the company's sales volume increased
in both the North American banana business and the retail
packaged salad business. The company also exited non-core,
unprofitable businesses in the year 2013 to remain profitable. We
believe that this deal will help Chiquita to regain its position
of a leading banana supplier.
Other better-ranked food companies include
Diamond Foods, Inc.
The Hain Celestial Group, Inc.
Post Holdings Inc
), all of them holding a Zacks Rank #2 (Buy).
CHIQUITA BR INT (CQB): Free Stock Analysis
DIAMOND FOODS (DMND): Free Stock Analysis
HAIN CELESTIAL (HAIN): Free Stock Analysis
POST HOLDINGS (POST): Free Stock Analysis
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