Chiquita rejects Brazilian buyout offer
08/14/2014 4:29 PM
08/15/2014 12:56 PM
Charlotte-based Chiquita Brands International rejected an unsolicited $610 million buyout offer from two Brazilian firms on Thursday, committing instead to completing its pending merger with an Irish produce company.
But Cutrale and Safra Group, the Brazilian companies, indicated late Thursday that they don’t plan to back down, and said they’re considering “all alternatives” to push Chiquita to deal with them.
In a strongly worded statement, Cutrale and Safra said they were “extremely disappointed” and called the Chiquita board of directors’ decision a “continuation of its track record of shareholder value destruction.”
Chiquita’s board voted unanimously to turn down the upset bid of $13 per share from Safra, a Brazilian bank, and Cutrale, an orange juice supplier. The deal would have superseded Chiquita’s deal with Dublin-based Fyffes, first announced in March.
Chiquita said it won’t give Cutrale and Safra any more information to conduct due diligence or negotiate with the companies.
“The unsolicited offer from the Cutrale Group and the Safra Group announced on August 11, 2014, to acquire all of the outstanding stock of Chiquita for $13.00 per share in cash, is inadequate and not in the best interests of Chiquita shareholders,” the company’s board said in a statement.
Cutrale and Safra’s surprise offer Monday represented a 29 percent premium over Chiquita’s closing price Friday. After Chiquita’s rejection of the buyout offer Thursday, the company’s stock fell less than 1 percent in after-hours trading but remained above $13 a share.
The companies, both of which are privately held, could choose to raise their offer, possibly starting a bidding war for Chiquita.
“We believe that there exists (the) chance for the buyers to raise their bid,” Brett Hundley, an analyst with BB&T Capital Markets, wrote in a note to investors earlier in the week. “As any potential bid approaches $15 or higher, we would expect the (Chiquita) board decision to become more difficult.”
Though the directors have rejected the Brazilian companies’ first offer, Chiquita shareholders will still have their say. Chiquita is set to hold a special meeting Sept. 17 for its shareholders to vote on the Fyffes deal, which would combine the two companies in an all-stock deal that would create the world’s largest banana company.
Chiquita’s directors said Thursday that they’re encouraging shareholders to vote for the Fyffes deal.
“Chiquita remains committed to completing its transaction with Fyffes, which it believes will create a combined company that is better positioned to succeed in a highly competitive marketplace,” the company said Thursday.
Chiquita and Fyffes plan to close their deal by the end of the year. Cutrale and Safra say if they start negotiations immediately, they could acquire Chiquita by then as well.
“Our proposal provides greater and more certain value to Chiquita’s shareholders than the previously reported Chiquita‐Fyffes transaction,” Cutrale and Safra said.
About 320 people work for Chiquita in Charlotte. The company was lured from Cincinnati in 2011 with about $22 million worth of state and local incentives tied to job creation. While Chiquita has said it would keep most of its jobs in Charlotte after its merger with Fyffes, the combined company would be based in Dublin, allowing it to take advantage of Ireland’s lower corporate tax rate.
Cutrale and Safra haven’t said what might happen to Chiquita’s uptown Charlotte headquarters.
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