Chiquita board rejects offer from Cutrale-Safra

Group’s board continues to recommend a tie-up with Irish rival Fyffes

The board of Chiquita said a takeover bid by Brazilian juice maker Grupo Cutrale and investment firm Safra Group was "inadequate," and again recommended shareholders back a tie-up with Irish rival Fyffes.

The board of Chiquita said in a statement that Cutrale-Safra’s definitive, $14 a share offer “is not in the best interests” of shareholders, who have no assurances that the takeover proposal would remain available past October 24th should a vote on the Fyffes transaction fail.

“The Cutrale-Safra offer, in our judgment, is not a compelling alternative to ChiquitaFyffes as it limits the ability of Chiquita shareholders to realise the long-term value inherent in a combination,” the statement said.

Chairwoman Kerrii B. Anderson and chief executive Edward Lonergan said they are "always willing to give fair consideration to an increased offer by Cutrale-Safra."

Shares of Chiquita shed 1.6 per cent to $13.60. Fyffes tumbled 3.8 per cent to 0.9559 euros.

Chiquita estimates the present value of the future share price range of the combined company, which will be named ChiquitaFyffes, at between $15.46 and $20.01 under the assumption of growth in earnings before interest, tax, depreciation and amortisation of 5 per cent to 15 per cent next year, and a valuation multiple to 7 to 8 times annual ebitda.

On Wednesday, Cutrale-Safra offered $14 in cash per Chiquita share, valuing the company at $658 million, or 12.4 times annual ebitda. Cutrale-Safra’s definitive offer represents premiums of about 40 per cent to Chiquita’s August 8th closing share price and 19 per cent to Chiquita’s price based on revamped terms of the tie-up with Fyffes.

Cutrale-Safra did not have an immediate comment on Chiquita’s board statement.

Ms Anderson and Mr Lonergan called on shareholders to vote for Chiquita's merger with Fyffes in next week's ballot. On Tuesday, the City of Birmingham Firemen's and Policemen's Supplemental Pension System, a minority shareholder, filed a motion in a New Jersey federal court aimed at preventing the vote from taking place.

Cutrale controls one-third of the world's trade of orange juice concentrate, while Safra Group is a global banking and investment conglomerate controlled by Lebanese-Brazilian financier Joseph Safra, the world's richest banker.