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Chiquita to combine with Fyffes to be top banana

March 10, 2014|Bloomberg News

Chiquita Brands International Inc. agreed to buy Ireland's Fyffes for $559 million to create the world's biggest banana supplier.

The combined company will be called ChiquitaFyffes, the companies said Monday.

The all-stock deal brings together two of the world's oldest fruit importers, who between them have operations spanning the Americas, Europe and Asia. Chiquita Chief Executive Ed Lonergan, who will become chairman of ChiquitaFyffes, has sought to reshape his company, based in Charlotte, N.C., as a high-volume seller of bananas and salads while winding down and abandoning other product lines.

"The deal is logical and will be a good fit going forward for both parties," said David Holohan, an analyst at Merrion Capital in Dublin. "This is an excellent result for Fyffes."

Investors will get 0.1567 of a share in ChiquitaFyffes for each Fyffes share, while Chiquita holders will receive one share in the new company for each one of the existing company.

Fyffes Chairman David McCann will become CEO of the combined company, which will be based in Ireland, trade in New York and have annual sales of about $4.6 billion.

Chiquita investors will own about 50.7% of the combined entity, with Fyffes shareholders holding the remainder. As well as bananas, ChiquitaFyffes will supply melons, pineapples and packaged salads. The new business will target at least $40 million of annual cost savings by the end of 2016 through more efficient purchasing.

Shares of Chiquita climbed $1.16, or 11%, to $12 in New York.

Lonergan said he doesn't think there will be regulatory issues arising from the deal that can't be addressed.

He also said there's minimal overlap of both companies geographically. Chiquita operates in 70 countries including the U.S., with brands such as Chiquita Bananas and Fresh Express. Fyffes operates in Europe, Central and South America, and Asia.

Chiquita started more than 140 years ago when Captain Lorenzo Dow Barker bought 160 bunches of bananas in Jamaica, sailed to Jersey City, N.J., in 11 days and sold them for a profit. Fyffes says it has distributed the fruit since the 19th century, when it made a shipment to London from the Canary Islands.

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