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Chiquita Merges With Fyffes To Become Global Banana Leader

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Chiquita Brands International and Fyffes said this morning that their boards have unanimously approved a definitive agreement for Chiquita to combine with Fyffes in a stock-for-stock transaction. Chiquita shareholders are expected to own approximately 50.7 percent of the combined company—called ChiquitaFyffes—and Fyffes shareholders, 49.3 percent on a fully diluted basis. The deal would create a global banana/fresh produce company with about $4.6 billion in annual revenues. Chiquita and Fyffes plan to complete the transaction before the end of the year.

Charlotte, N.C.-based Chiquita is an international marketer and distributor of fresh food products, including bananas, packaged salads and healthy snacks. Chiquita has operations in 70 countries and a sizable presence in the U.S. market through brands including Chiquita Bananas and Fresh Express.

Fyffes is an international marketer and distributor of tropical produce marketed under a variety of brands, including Fyffes and Sol. It is headquartered in Dublin, Ireland, with operations in Europe, the U.S., Central America, South America and Asia. ChiquitaFyffes will be able to access worldwide market opportunities and capitalize on both the growing fresh food business and health and wellness trends by more effectively utilizing its geographical footprint and expanded distribution channels, according to the companies. ChiquitaFyffes will have an operating presence in more than 70 countries and a workforce of approximately 32,000 people around the world.

“This is a milestone transaction for Chiquita and Fyffes that brings together the best of both companies, which, we believe, will create significant value for our shareholders and offer immediate benefits for customers and consumers worldwide,” said Ed Lonergan, Chiquita CEO. “This is a natural strategic partnership that combines two complementary companies of long history and great reputations that have built upon an unwavering commitment to exceed our customers’ expectations. We will maintain our brands, all of which are valued by both customers and consumers. The combined company will also be able to provide customers with a more diverse product mix and choice. We know Fyffes well and our shared heritage will help to ensure a smooth integration as we work to bring best practices across geographies and business units to achieve substantial operating efficiencies.”

Added David McCann, Fyffes executive chairman, “This deal will be transformative and offer exciting opportunities for the new business. We are looking forward to working with the Chiquita team to build a combined company, which is well positioned to succeed in our highly competitive marketplace and which will create significant value for our shareholders. Our outstanding employees will benefit from working for a larger, more diverse business, which offers opportunities for growth. We believe we will be able to use our joint expertise, complementary assets and geographic coverage to develop a business that can run smoothly and efficiently to better partner with our customers and suppliers.”

Lonergan will serve as chairman and McCann will become CEO of the combined company.

The companies says the combination of Chiquita and Fyffes is consistent with the strategic goals of both businesses, including increasing shareholder value by:

• Combining complementary businesses that provide substantial operational efficiencies and cost savings: Chiquita and Fyffes anticipate that the transaction will potentially provide annualized recurring before-tax overhead and operational synergies of at least $40 million by the end of 2016. These recurring annual synergies are anticipated to be comprised of efficiencies in the areas of logistics and procurement, among others. In addition to the benefits for customers, taking into account the anticipated synergies, the transaction is expected to be accretive to shareholders of both companies on a net income basis no later than the first full calendar year following the close of the transaction.

• Uniting two leading companies in the produce industry enhances scale, scope and portfolio diversity: Upon completion of the transaction, the combined company will become the leading global banana and other fresh produce company with greater scale and efficiency. As part of a larger, more diversified organization, on the basis of current volumes, ChiquitaFyffes will become the largest global entity in the banana category with sales of more than 160 million boxes annually. The company will maintain its significant presence in the packaged salads and healthy snacks category. The company also will have stronger positions in the melon and pineapple market segments as the number one importer in the U.S. and number three distributor globally, respectively.

• Leveraging greater global scale to better serve customers and reach new markets: The combined company will be able to broaden its geographic footprint and distribution channels to access new market opportunities. It will be well-positioned to expand its global supply chain to improve product availability; build on each company’s well-established presence in developed economies and further the progress both companies have made in expanding into high growth emerging markets worldwide.

• Generating significant cash flow and a more efficient capital structure: With the full benefit of the anticipated synergies, the combined company would have had an aggregate EBITDA in 2013 of approximately $214 million on a pro forma basis, implying pro forma combined synergy adjusted net debt to EBITDA of 2.7 times. Moving forward, the combined company also will have the potential for further reductions in leverage.

• Expanding sourcing ability in key production areas: With more than 24,000 hectares of owned or leased operations in Central America, the combined company is expected to be able to more efficiently manage its sourcing portfolio.

• Commitment to shared purpose and sustainability: ChiquitaFyffes will continue its environmental and social responsibility commitments, including adding additional organic, Fairtrade, GlobalGAP and Rainforest Alliance certified capacity.

The transaction values the entire issued and to-be-issued share capital of Fyffes at approximately $526 million. ChiquitaFyffes, which will be a publicly listed company, will be traded on the New York Stock Exchange (NYSE). In addition to Lonergan and McCann, the senior leadership team will include: Tom Murphy, CFO; Coen Bos, COO-Fresh Fruit; Brian Kocher, COO-Salads & Healthy Snacks; Kevin Holland, CAO; James E. Thompson, chief legal officer; and Manuel Rodriguez, corporate responsibility officer. The senior executives will be located in corporate offices in Charlotte, N.C., and Dublin, Ireland. Corporate headquarters will be in Dublin. The combined company’s board of directors will reflect an equal combination of directors from both companies and one mutually agreed upon director.


About the author

Kristen Cloud

Kristen was Editor at The Shelby Report.

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