Shares in Fyffes dropped by 1 per cent yesterday after the firm said it had abandoned acquisition talks with Italian fruit firm Bocchi.
A link between Fyffes and Bocchi has been mooted in the market for several months, although Fyffes has never commented on the process.
The firm yesterday confirmed to the Irish Stock Exchange that it had been considering a deal with Bocchi but said talks had ended. It did not give a reason for the development.
"Whilst discussions have taken place, negotiations between the parties have ended and, consequently, no transaction is currently contemplated," the stock exchange announcement read.
The company did not rule out other acquisitions. "Fyffes intends to continue its strategy to expand its business and to pursue development opportunities in its sector," it said.
The ending of the talks generated a muted response from analysts, who pointed out that acquisitions of the size of Bocchi are quite rare in the fruit market.
They also noted that this is the second time in two years that Fyffes has walked away from a large purchase.
It emerged in March that Fyffes had spent €3.7 million on taking advice about a possible acquisition last year without actually concluding a deal.
This would, at the time, have suggested an acquisition price tag of at least €120 million. Analysts placed a price tag of about €150 million on Bocchi at the start of this month.
Fyffes, which had some €152 million in cash on its balance sheet at the end of June, would have had no problem funding such a purchase.
Merrion analyst Mr Robert Brisbourne noted yesterday that a deal with Bocchi would have allowed the firm to enhance earnings while addressing its relatively large cash balances. Mr Brisbourne said pipeline acquisitions were likely to be smaller.
Goodbody analyst Mr Liam Igoe suggested that Fyffes could now use some of its cash to buy back a portion of its own shares.
Bocchi is active in general produce and operates an import and export business across continental Europe. It also owns farms in South America.
NCB analyst Mr Paul Meade said that the firm would have held appeal for Fyffes because importer margins are "significantly better" in continental Europe than in the UK.
Fyffes shares closed at €1.84, down two cents.
