Investor miserliness over Fyffes deal is bananas

Chairman gives short shrift to EGM question over extra cent on share purchase price

Fyffes chairman David McCann at the company’s EGM in Dublin on Monday. Photograph: Cyril Byrne

Fyffes chairman David McCann at the company’s EGM in Dublin on Monday. Photograph: Cyril Byrne

 

Talk about trying to squeeze the last cent out of a deal.

Fyffes’ stock price on the last day of trading in 2016 peeped one cent above a €2.25-a-share bid for the company from Japan’s Sumitomo Corporation. It prompted one shareholder at an investor meeting on Monday to rubber-stamp the deal to ask whether management should go back to the Japanese to up their offer.

Fyffes’ executive chairman, David McCann, was having none of it. And rightly so. The offer for the banana, melon and pineapple distributor, which emerged in early December, was 49 per cent above the stock’s closing price on the previous day and 37 per cent above its previous all-time high of €1.62, which occurred last April.

Outside, however, a group of about a dozen protestors were fighting for the basic rights of some of its poorest workers in South America. While Fyffes has about 2,800 employees, subsidiaries involved in fruit production employ anywhere between 1,000 and 13,000 casual farm workers, depending on the stage of the growing season. The total remuneration bill for seasonal workers amounted to €22.3 million in 2015, according to its most recent report.

Minimum wage

As shareholders voted through a takeover that would deliver a €751 million payday, including €87.5 million for the McCann family, workers on melon plantations in Honduras are struggling to secure a minimum wage and are being harassed and sacked for joining unions, according to allegations from Banana Link, a UK not-for-profit.

The Ethical Trading Initiative (ETI), a UK government-sponsored programme to improve the lives of workers across the globe, has counted Fyffes as a member for the past decade and a half. A statement updated on the ETI’s website last week said “key aspects” of Banana Link’s complaint against the Irish company have been upheld by the organisation’s executive director.

Fyffes is now required to put in place a detailed and time-bound improvement plan by February 3rd under its ETI membership obligation process. Shareholders gathered in the function room of a Dublin hotel on Monday to cast a vote in favour of their share-sale cheques did not refer to the issue.

But Fyffes’ new owner, Sumitomo, told The Irish Times it would change any practices that needed to be changed. It is surely honour bound to do so.

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