Chiquita Brands International Inc. has reached an agreement over the acquisition of Fyffes Plc in an all-stock transaction, which is estimated to about 526 million dollars and is also expected to create the largest banana company in the world with annual revenue of almost 5 billion dollars. The new company is forecast to be able to meet the increasing demand for bananas globally and is projected to make some improvements to shipping.
Mr. Patrick Higgins, who is an analyst working at Goodbody Stockbrokers approved of the move, saying for the Financial Times: “The industry has been suffering from overcapacity for the past few years so a combination of the two major players should resolve some of the volatility of the market.”
The companies made an official joint statement today, revealing that after being finalized, the deal is expected to create a business that will be able to generate about 4.6 billion dollars of annual revenue. The new entity will be named ChiquitaFyffes Plc and will have about 32,000 employees. The future market value of ChiquitaFyffes is estimated to more than 1 billion dollars. About 50.7% of the new entity will be held by the shareholders of Chiquita, and the rest of the shares will be held by the investors of Fyffes.
One of the analysts working for Merrion Capital – Mr. David Holohan, commented the announcement for Bloomberg: “The deal is logical and will be a good fit going forward for both parties. This is an excellent result for Fyffes.”
The new entity will be put under the charge of the current Chief Executive Officer of Chiquita – Ed Lonergan, who will be appointed at the position of Chairman. Mr. Lonergan said in an interview cited by the Wall Street Journal: “This is a milestone transaction for Chiquita and Fyffes that brings together the best of both companies.”
Chiquita Brands International Inc. jumped by 11.90% in New York by 15:50 GMT, marking a one-year change of 79.67%. The company is valued at $507.67 billion. According to the Financial Times, the 2 analysts offering 12-month price targets for Chiquita Brands International Inc. have a median target of $14.00, with a high estimate of $15.00 and a low estimate of $13.00. The median estimate represents a 29.15% increase from the previous close of $10.84
Fyffes Plc jumped by 46.07% to close 1.30 euro in Dublin, marking a one-year change of +107.34%. According to the Financial Times, the one analyst offering a 12 month price target expects Fyffes Plc share price to rise to 0.98 euro in the next year from the previous close of 0.89 euro.
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