Fyffes shares drop sharply on news of latest Chiquita offer

Monday 11 August 2014 17.06
New offer is a 29% premium to Chiquita's closing price on August 8
New offer is a 29% premium to Chiquita's closing price on August 8

Shares in banana company Fyffes closed nearly 15% lower today after Cutrale Group and Brazilian investment firm Safra Group offered to buy Chiquita Brands - threatening Fyffes' earlier deal with Chiquita.

In May, Chiquita Brands and Fyffes had agreed an all-stock deal to create the world's biggest banana supplier.

However, that deal was jeopardised today by the new offer from Cutrale and Safra for Chiquita.

The two companies said they are offering to buy Chiquita Brands International in a cash offer that valued the banana distributor's equity at $610.5m.

Cutrale and Safra said they would offer $13 per share in cash to Chiquita shareholders, a 29% premium to Chiquita's closing price on August 8.

The two companies also said their proposal had been sent to Chiquita's board of directors and urged the company to enter negotiations that will lead to the signing of a definitive transaction agreement.

The new Chiquita-Fyffes merged firm was expected to be domicilied in Ireland for tax purposes.

The US Congress is aggressively trying to curb so-called inversions, in which US corporations move their tax domiciles abroad to countries with a lower tax rate.

Shares of Chiquita rose more than 30% in early trade in response to the competing offer. They were trading at $13.30, above the offer price of $13, indicating that investors may expect a bidding war for the company.

The $7 billion global banana market is controlled by Chiquita, Fresh Del Monte Produce, Hawaii-founded Dole Food Company and Fyffes.