Chiquita Rockets Following Cutrale’s Buyout Offer

Chiquita Rockets Following Cutrale’s Buyout Offer
By: Martin Blanc
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Earlier today, Chiquita Brands International Inc (CQB) received an unsolicited all-cash buyout offer of $611 million from one of the world’s largest juice producers, Cutrale. Chiquita stock gained as much as 30% in trading today on the news.

The plans that Brazilian juice producer Cutrale – working in tandem with Brazilian investment firm Safra Group – announced today could put a hold to Chiquita’s plans to merge with Fyffes Plc (FFY).

In March, Chiquita announced plans to merge with Ireland-based Fyffes to make the world’s largest producer and marketer of bananas, and to benefit from lower corporate tax rates in Ireland. Those plans, however, came under scrutiny from US regulators over concerns of a global monopoly in the banana industry and the problematic tax inversion deal. Currently, 80% of the global banana market is controlled by four major food companies: Chiquita, Fyffes, Fresh Del Monte Produce Inc. (FDP), and the Dole Food Company.

However, the recent announcement from Cutrale and Safra Group could put a spanner in that tie-up agreement, as the new buyout proposal is offering a premium of 29% from Chiquita’s closing price on Friday. Cutrale’s proposal has caused the stock to rocket more than 30% to come in line with its offer price of $13 a share; shares of Dublin-based Fyffes, however, fell almost 14%.

Cutrale has the lion’s share of the global orange juice market and also operates in the markets of soybeans, lemons, peaches, and apples. According to the press release, the merger will provide Chiquita with a diversified product portfolio and an “extensive” integration into the juice and fruit value chain.

Safra Group manages assets worth more than $200 billion and operates in the Middle East, the US, and Europe. Cutrale and Safra distinguished the new proposal with the Fyffes deal, arguing that the companies could finalize the agreement “within the same timeframe you [Chiquita] have indicated for the Fyffes transaction, [and] without the execution risk and uncertainty inherent in that transaction.”

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