David McCann, the executive chairman of the banana distributor Fyffes, travelled to the US this week to appeal directly to major Chiquita shareholders to stick with its proposed $1 billion merger with his company, in the face of pressure to switch to a rival all-cash bid from two Brazillian billionaires.
Mr McCann in recent days met with several large institutional shareholders of Chiquita, in an effort to convince them that the merger would be a better long-term bet for the US company than the rival cash bid from companies associated with Joseph Safra and José Luis Cutrale.
Fyffes declined to comment when asked about Mr McCann’s trip to the US or to identify the shareholder groups with whom he met.
Chiquita, whose shareholders must choose next month between the merger to create ChiquitaFyffes and a $13-a-share bid from the Cutrale-Safra groups, is co-owned by some of the biggest institutional investors on Wall Street.
According to regulatory filings, Chiquita's biggest shareholders include Dimensional Fund Advisors, which own 8.5 per cent of its stock; Vanguard Group, which owns 5.7 per cent; and JP Morgan Chase, which owns 5.4 per cent.
Other big shareholders likely to be on Mr McCann's list for lobbying include Blackrock with 3.55 per cent and Point72 Asset Management with 4.3 per cent.
Chiquita’s top 10 instiutional shareholders together control almost 46 per cent of its stock. If Mr McCann’s lobbying efforts with those groups were to bear fruit, the merger, which is still supported by Chiquita’s board, would likely still go ahead and the Brazillian bid would be rejected.
Fyffes this week released to the stock exchange in New York, where ChiquitaFyffes would be listed, a presentation reiterating the merits of the merger, which it cast as a choice between $13 a share cash immediately, or, with the merger, “illustrative value in excess of $21 a share in 2016”.
Chiquita and Fyffes have promised that the merged entity, which would be run by Mr McCann and headquartered in Dublin, would squeeze out savings of $60 million annually by that time.
Cutrale-Safra released a strongly worded statement last night dismissing Fyffes presentation.
“[It] is nothing more than a desperate attempt... to salvage [the proposed merger],” the statement read. “It is no wonder that Fyffes is desperate to salvage this transaction, given it provides Fyffes management control of [ChiquitaFyffes].”
The Brazillians say the proposed savings and rationale for the merger are “highly dubious” and “misleading” and “underpinned by financial alchemy”.
Following weeks of pressure from Cutrale-Safra after their cash bid was initially rejected by Chiquita’s board, the US company has allowed them access to its books to complete due diligence and present a final offer.