and Clementine Fletcher
Chiquita Brands International, (CQB) owner of the namesake banana label, agreed to buy Fyffes in an all-stock transaction that values the Dublin-based fresh-produce distributor at about $526 million.
The deal will create a business with annual revenue of about $4.6 billion, the companies said Monday in a statement. Chiquita shareholders will own about 50.7 percent of the combined entity, with Fyffes investors holding the remainder.
"The deal is logical and will be a good fit going forward for both parties," said David Holohan, an analyst at Merrion Capital in Dublin. "This is an excellent result for Fyffes."
The transaction will create the world's biggest banana company, which will also produce packaged salads, melons and pineapples. Known as ChiquitaFyffes, the new business will target at least $40 million of annual cost savings by the end of 2016 through more efficient purchasing.
The transaction values each Fyffes share at 1.22 euros ($1.69), according to the terms. That's 37 percent more than the company's March 7 closing price and almost double the stock's value a year earlier, according to data compiled by Bloomberg.
Fyffes shares rose 36 percent to 1.21 euros at 11:57 a.m. in Dublin. That's the highest price in seven years, giving the company a market value of 353.9 million euros. Chiquita fell 0.2 percent to $10.84 in New York on March 7, valuing the Charlotte, N.C.-based company at about $508 million.
Chiquita operates in 70 countries including the U.S., producing brands such as Chiquita Bananas and Fresh Express. Fyffes operates in Europe, Central and South America, and Asia.
The companies plan to complete the transaction this year, pending approval by shareholders and the Irish High Court, the statement shows. The combined business will target "the growing fresh-food business and health and wellness trends," they said.
"This is a milestone transaction for Chiquita and Fyffes that brings together the best of both companies which,
Fyffes shareholders will get 0.1567 ChiquitaFyffes shares for each share they own, while Chiquita holders will receive one share in the new company for each one they hold. Lonergan will serve as chairman and David McCann, Fyffes's executive chairman, will become CEO of the combined company, which will be domiciled in Ireland and listed on the New York Stock Exchange.
The deal brings together two of the world's oldest fruit importers. Chiquita started more than 140 years ago when Captain Lorenzo Dow Barker bought 160 bunches of bananas in Jamaica, sailed to Jersey City in 11 days and sold them for a profit. Fyffes says it has distributed bananas since the 19th century, since a batch was delivered to London from the Canary Islands.
McCann and his family have led Fyffes since the 1950s when his father Neil joined the business, according to company statements. Balkan Investment, an entity run by the McCanns, controls about 13 percent of Fyffes and intends to vote for the deal, according to Monday's statement.
The Jerry Zucker Revocable Trust, which controls about 13 percent of Fyffes, also has committed to backing the merger, the companies said. Other shareholders include Fidelity Investment funds, which control about 20 percent.
The biggest holders in Chiquita include Dimensional Fund Advisors, BlackRock (BLK) and Vanguard Group, who control almost 20 percent combined.
Goldman Sachs Group (GS) is acting as lead financial adviser to Chiquita, and Wells Fargo Securities as financial adviser to the Chiquita board of directors. Lazard (LAZ) is lead financial adviser to Fyffes.
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