Fyffes is to merge with its US rival Chiquita in an all-share deal worth more than $1 billion and creating the world's biggest banana company.
The merged entity, ChiquitaFyffes, will be listed on the stock exchange in New York and headquartered in Dublin. Fyffes, which has been closely associated with members of the McCann family for decades, will delist from the stock exchange in Dublin once the deal closes later this year.
David McCann, currently the executive chairman of Fyffes, will assume the role of chief executive of the combined entity while Ed Lonergan, currently chief executive of Chiquita, will be its chairman.
Main board
Mr McCann will join the ChiquitaFyffes main board along with Fyffe's current chief financial officer Tom Murphy, who will also assume that role for the new company.
Each side will contribute an equal number of directors to the new board, with one additional director to be mutually proposed by the two merging entities.
Fyffes and Chiquita will each then become wholly owned subsidiaries of the Dublin-headquartered holding company, which will have annual sales of about $4.6 billion. Chiquita’s sales are currently about double that of Fyffes.
Fyffes shareholders will end up owning 49.3 per cent of the enlarged company, with Chiquita’s shareholders controlling the remaining 50.7 per cent. The deal valued Fyffes at about €1.22 per share, a 38 per cent premium to its share price as markets opened in Dublin yesterday morning.
By the close of trading, Fyffes share price had soared by 46 per cent to close at €1.30. A year ago it was valued at about 63 cents per share.
The combined entity will be the world’s largest producer and distributor of bananas, distributing a total of 160 million boxes of bananas globally. It will have about 32,000 staff.
It will be the number one distributor of bananas in Europe and number two in the US market. It will be the number one importer of melons into the US, and the number three importer of pineapples in both Europe and the US.
Bananas currently accounts for 80 per cent of Fyffes business, while the new company will derive 70 per cent of its revenues from the fruit. About a fifth of the enlarged business will come from Chiquita’s US-based prepared salads and fruit snacks division, with other fruit distribution accounting for the rest.
Target markets
Its revenues will be split between Europe (46 per cent) and the US (47 per cent), with about 7 per cent of its sales coming from other markets. Both Mr McCann and Mr Lonergan said yesterday the enlarged company will aggressively target markets in the Middle East, Russia and Asia.
“We can grow at a pace that neither company could do separately,” said Mr Lonergan, who called the deal “a true merger of equals”.
By combining the two companies, ChiquitaFyffes will make annual savings of about $40 million, both firms said yesterday, with the full effect of the savings feeding through by the end of 2016. The “efficiencies” will come initially from its shipping and procurement operations, although Mr McCann was unable to say what the impact would be on job numbers.
It is likely, however, that there will be little impact on Fyffe’s job numbers in Ireland, as Chiquita does not have much by way of operations here.
Fyffes also yesterday reported its preliminary annual results for 2013, with sales of €1.08 billion, up 6.3 per cent. Its earnings before interest, tax, depreciation and amortisation (Ebitda, a key financial metric) of €40 million.
