Reducing the world’s top four banana companies to three, the boards of Chiquita Brands International Inc. and Irish competitor Fyffes PLC have agreed that the Charlotte, N.C., company will buy the Dublin company in an all-stock deal valued at $526 million.
Corporate leaders said in a news release their individual brands will be retained following the merger. They plan to close the deal by the end of 2014. Chiquita shareholders will own 50.7% of the combined company, ChiquitaFyffes, while Fyffes shareholders will have the remaining 49.3%, according to the March 10 news release.
Ed Lonergan is chairman, and David McCann will become chief executive officer of the combined company. By combining operations the corporate officials project an operational pre-tax savings of at least $40 million by the end of 2016, according to the release.
Greater scale and efficiency via a larger, more diversified organization should result in ChiquitaFyffes generating annual banana sales of more than 160 million boxes, according to the release.
The company maintains its significant presence in the packaged salads category, with Chiquita’s Fresh Express, Salinas, Calif. The company will also have stronger positions in the melon and pineapple market segments as the No.1 importer in the U.S. and No. 3 distributor globally, respectively, according to the release.
The new company is expected to be worth about $4.6 billion in annual revenues, according to Reuters News Service.
“This is a natural strategic partnership that combines two complementary companies of long history and great reputations that have built upon an unwavering commitment to exceed our customers’ expectations,” Lonergan said in the release. “We will maintain our brands, all of which are valued by both customers and consumers. The combined company will also be able to provide customers with a more diverse product mix and choice.”
Several entities must sign off on the deal, according to the release, including both companies’ shareholders, the High Court of Ireland, other European jurisdictions, as well as meeting requirements of U.S. antitrust law.
Reuters reported there may be antitrust issues, citing a United Nations report that shows more than 80% of the banana market worldwide is already controlled by the two companies and two other multinationals, Fresh Del Monte and Dole Food Co.
Chiquita operates in 70 countries. Fyffes has operations in Europe, the U.S., Central America, South America and Asia. ChiquitaFyffes will have a workforce of about 32,000 around the world, according to the release.
“We believe we will be able to use our joint expertise, complementary assets and geographic coverage to develop a business that can run smoothly and efficiently to better partner with our customers and suppliers,” McCann, Fyffes executive chairman, said in the release.
The ChiquitaFyffes senior leadership includes Tom Murphy, chief financial officer; Coen Bos, chief operating officer for fresh fruit; Brian Kocher, chief operating officer for salads and healthy snacks; Kevin Holland, chief administrative officer; James Thompson, chief legal officer; and Manuel Rodriguez, corporate responsibility officer.
The senior executives will be based in Charlotte and Dublin. The combined company’s board of directors will have an equal combination of directors from both companies and one mutually agreed upon director, according to the release.
Benefits of the merger, according to the release are:
- Synergies, including improvements in logistics and procurement;
- Expanded sourcing in key production areas with about 60,000 acres of owned or leased operations in Central America; and
- Environmental and social responsibility commitments, including additional organic, Fairtrade, GlobalG.A.P. and Rainforest Alliance certified capacity.