The global banana market is controlled by four multinationals, according to the United Nations: Chiquita , Fresh Del Monte, Hawaii-founded Dole Food Company and Fyffes. With this $526 million deal the new firm, ChiquitaFyffes, will grab about 14 percent market share and $4.6 billion in annual revenues.
"The first three (companies) on a global scale are not too far away from each other, whereas Fyffes was a good deal smaller. Now a firm number one has been created, there will be some impetus for further consolidation in the sector," said David Holohan, an analyst at Merrion Stockbrokers in Dublin.
Chiquita and Fyffes sell 180 million boxes of bananas a year between them, versus 117 million for Del Monte and 110 for Dole. Their merger is expected to generate operational pre-tax savings of at least $40 million by the end of 2016.
The deal will be subject to review by competition authorities but, Holahan added, is unlikely to prompt burdensome regulatory demands because the two companies operate mainly in separate North American and European markets.
"I don't think competition is too big an issue with it," he said. "If Europe did require disposals, I don't think it would be a problem."
ChiquitaFyffes will have a market value of $1.1 billion, with Chiquita shareholders owning about 50.7 percent of the combined company and Fyffes shareholders the remaining 49.3 percent, the companies said.
Fyffes shares leaped nearly 30 percent on Monday, bringing the shares, which had traded at about 10 times earnings prior to the announcement, roughly into line with its peers.
Chiquita shareholders will get one share of the new company for each share held. Fyffes investors will get 0.1567 of a share in the new group for each existing share, which values it at a premium of 38 percent over its Friday's closing price.
ChiquitaFyffes will be listed in New York, but domiciled in Ireland, bringing tax savings similar to U.S. drugmaker Perrigo's acquisition of Elan last year.
Goldman Sachs and Wells Fargo Securities, LLC acted as financial advisers for Chiquita and its board and Lazard for Fyffes. — Reuters
source: gmanetwork.com
