Fruit distribution firm Fyffes has announced plans to delist from the official markets in Ireland and Britain and apply to trade on the AIM and IEX markets as part of the proposed demerger of its general produce and distribution business to a newly-formed company, Total Produce. Ciarán Brennan reports.
The company said the new listings would be in the best interests of Fyffes and its shareholders as a whole, whether or not the demerger is approved.
The move is expected to lessen the regulatory and financial burden on the company and make acquisitions easier.
"After careful consideration, the board has concluded that IEX and AIM are the most appropriate markets for the Fyffes shares. It is the board's view that the regulatory regime attaching to IEX and AIM companies is better matched to the circumstances of Fyffes," the company said.
Fyffes' chairman Carl McCann said he did not expect the change to have any effect on the company's institutional investors. "I think you will still find the 60 per cent of the Blackrock share register that was given out to shareholders probably still looks very similar to the day we did that. I don't think it will make much difference," he said.
Blackrock International is the property portfolio that Fyffes demerged and floated on IEX and AIM earlier this year.
In a circular that it posted to shareholders yesterday, Fyffes said shareholders would receive one new share in Total Produce for each existing Fyffes share held if the demerger is approved at an extraordinary general meeting on December 5th.
Fyffes' current operations consist of two distinct business - the tropical produce section and the general produce and distribution business, each of which operates within different segments of the distribution chain, with different risk profiles and separate operational management and facilities.
Fyffes' board said the current market valuation of Fyffes did not adequately reflect the value of the company's component parts.
The demerger would enable both businesses to pursue independent growth strategies, with the tropical produce business continuing to pursue industry consolidation and the general produce and distribution business primarily continuing to pursue acquisitions, it said.
Fyffes' general produce and distribution business is one of the leading operators within the European fresh produce distribution sector. It is also one of the leading distributors of southern hemisphere fresh produce in Europe.
The tropical produce business is one of the leading importers of bananas, pineapples and melons into the EU. It has a higher economic risk profile as it sources most of its produce on an annual fixed-price basis and markets on a shorter-term price basis
Carl McCann will be the executive chairman of the demerged business, while Rory Byrne will take the chief executive's position. David McCann will be executive chairman of the continuing Fyffes' business, with Jimmy Tolan becoming chief executive.
