DUBLIN/SAO PAULO (Reuters) - Irish banana producer Fyffes Plc FFY.I agreed on Friday to boost U.S. rival Chiquita Brands International Inc’s ownership of a proposed combined company, in an apparent attempt to stave off a competing deal.
Under the revised proposal, approved by both boards and unveiled in a joint statement, Chiquita’s share would increase to 59.6 percent from 50.7 percent of the resulting entity, which would be worth just under 976 million euros ($1.24 billion) based on Thursday’s closing prices of the two firms.
The decision comes days after Chiquita engaged in talks with Brazilian juice maker Grupo Cutrale and Safra Group, the banking and investment group, which made a $611 million unsolicited bid for the U.S. firm. The revised Chiquita-Fyffes deal terms value the combined company at about $11.8 per share, about 10 percent below the $13, all-cash proposal by Cutrale and Safra.
“We are pleased with the increased value that these enhanced terms for Chiquita bring to our shareholders,” Ed Lonergan, Chiquita’s chief executive officer, said in the statement.
Fyffes shares rose 3.7 percent to 1.11 euros on Friday, while Chiquita gained 0.6 percent to $14.09 in early New York trading.
In a separate statement, Cutrale and Safra said Fyffes is using “a gameplan of trying to hoodwink Chiquita investors with ongoing rejiggered information, ranging from suddenly found cost savings to ‘illustrative’ stock price valuations to rescrambled combination terms.”
Cutrale and Safra added that “none of this can disguise the fact that the Chiquita-Fyffes combination is highly flawed and fraught with risks for Chiquita shareholders.” This week, the U.S. government announced rules to curb so-called tax inversions, an important component behind the Fyffes-Chiquita transaction.
On Sept. 8, Fyffes granted a waiver so Chiquita could negotiate with Safra and Cutrale, which had at the time begun preliminary steps to launch a proxy fight. Some of the conditions Chiquita imposed to engage in talks included completing due diligence and delivering a final proposal by Sept. 16, and that their final proposal remained open for evaluation by its board until Nov. 15.
The merged company would have a 14 percent share of the $7 billion global banana market, giving it significant clout in negotiating with retailers. Chiquita and Fyffes plan to delay shareholder meetings to approve the revised deal until late October, the statement said.
Cutrale and Safra have complained the Chiquita-Fyffes strategy of “adjourning rather than postponing” the meetings by Oct. 24 will limit the number of present shareholders that could be eligible to cast a vote.
The revised terms increases the termination fee payable to Fyffes to 3.5 percent of total value of issued Chiquita share capital from 1 percent.
Chiquita and Fyffes, which compete with Fresh Del Monte Produce Inc (FDP.N) and Hawaii-founded Dole Food Company, are on course to secure conditional EU approval for the tie-up, sources told Reuters this week.
Reporting by Conor Humphries and Guillermo Parra-Bernal; Editing by Meredith Mazzilli and Jason Neely