Brazilian group sweeten offer to buy Chiquita

Cutrale and Safra raise offer but analysts say Fyffes deal will still go ahead

The Fyffes deal, announced in March, would create the world’s largest banana company and cut Charlotte, North Carolina-based Chiquita’s tax bill by enabling it to move its headquarters to Ireland. Photograph: Simon Dawson/Bloomberg

The Fyffes deal, announced in March, would create the world’s largest banana company and cut Charlotte, North Carolina-based Chiquita’s tax bill by enabling it to move its headquarters to Ireland. Photograph: Simon Dawson/Bloomberg

 

Brazil’s Cutrale Group and Safra Group boosted their offer to buy Chiquita Brands International Inc. to about $658 million, raising pressure on the banana producer to cancel its planned purchase of an Irish competitor.

Cutrale-Safra increased its offer to $14 a share, the joint bidders said today, 7.7 per cent more than their initial, unsolicited proposal of $13. The transaction would be financed with equity from affiliates of Cutrale and Safra and isn’t subject to financing conditions. Cutrale, a closely held fruit juice company controlled by Brazil’s Jose Luis Cutrale, has partnered with banks controlled by Joseph Safra, Brazil’s second-richest man, to challenge Chiquita’s planned acquisition of Fyffes.

The Fyffes deal, announced in March, would create the world’s largest banana company and cut Charlotte, North Carolina-based Chiquita’s tax bill by enabling it to move its headquarters to Ireland.

While Chiquita has continued to recommend the Fyffes combination, it adjourned a shareholder vote on the purchase and let Cutrale-Safra carry out due diligence so that the Brazilians could make another offer. Chiquita will consider the offer, the company said in a separate statement today.

Fyffes said in a separate statement today that its merger with Chiquita remains “superior” to Cutrale-Saffra’s takeover of Chiquita.

Matching economics

The Cutrale-Safra deal value is $1.24 billion including the assumption of Chuiquita’s net debt, according to data compiled by Bloomberg. The latest offer is below the $16 minimum needed to match the economics of Chiquita’s proposed takeover of Fyffes, David Holohan, a Dublin-based analyst at Merrion Capital Group Ltd., said. The Fyffes deal will proceed, he said.

Chiquita rose 5.1 per cent to $13.83 at the close in New York. Fyffes fell as much as 4.9 per cent to 96 cents in Dublin, the biggest intraday drop since September 5th, before closing down 1.7 per cent at 99 cents.

Cutrale controls more than one-third of the $5 billion orange-juice market and has global operations in apples, peaches, lemons and soybeans.

Bloomberg