Chiquita Brands International Inc. is reviewing a new, higher offer from Brazilian investors who want to buy the company, challenging a merger deal between the American banana giant and Ireland-based Fyffes Plc.
“Consistent with its fiduciary duties, Chiquita’s board of directors, in consultation with its legal and financial advisors, will carefully review and consider the offer in light of the best interests of the company and its shareholders,” according to a news release from Charlotte, N.C.-based Chiquita on Oct. 15.
The day before, Chiquita officials filed a document with the Securities and Exchange Commission updating details of the Fyffes deal and its benefits to shareholders.
The new offer from Brazil’s Cutrale Group and Safra Group is $14 per share, a dollar more per share than their original offer.
A financial analyst based in Fyffes’ hometown of Dublin told Bloomberg News that he expects the Fyffes deal to proceed. Analyst David Holohan, Merrion Capital Group Ltd., told Bloomberg News the latest offer from the Brazilians is still below the $16 minimum needed to “match the economics of Chiquita’s proposed takeover of Fyffes.”
The new bid comes as Chiquita revealed preliminary results for the third quarter, which ended Sept. 30. Net sales increased to $739 million, compared with $723 million in the third quarter in 2013, according to a news release. Operating income was $2 million for the quarter, compared to $1 million for the third quarter of 2013.
Chiquita officials contend the deal with Fyffes will help shareholders continue to make money, according to the Oct. 14 filing with the SEC. Describing the Fyffes deal as “significantly more favorable,” Chiquita officials said in the filing benefits include:
- Incremental equity value of approximately $150 million based on the revised ownership level of 59.6%;
- Increased value of the Fyffes transaction since announcement of the original transaction; and
- An additional $20 million of synergies for a total of at least $60 million in annualized pre-tax cost synergies by the end of 2016 resulting in a benefit of approximately $1.80 per share.
Some financial analysts say the deep pockets of the Brazilians will make them difficult to beat in the eyes of many shareholders.
Cutrale Group is a juice company controlled by Jose Luis Cutrale, who has partnered with banks controlled by Joseph Safra, Brazil’s second-richest man, to challenge the Fyffes deal, according to reports in the financial press.
Cutrale controls more than one-third of the $5 billion orange-juice market and has global operations in apples, peaches, lemons and soybeans, according to media reports.