Two Brazilian companies on Wednesday upped their bid for Charlotte-based banana company Chiquita Brands International to $14 per share, adding more intrigue to a takeover fight that is headed toward a key shareholder vote next week.
Cutrale, an orange juice maker, and Safra Group, a banking conglomerate, called their $658 million offer a superior transaction to Chiquita’s proposed merger with Irish produce company Fyffes when “taking into account all financial, regulatory, legal and other aspects of our offer.”
Chiquita said its board will carefully review the new offer, while Fyffes Chairman David McCann said his company’s merger proposal remains the superior deal. The implied value of the Chiquita-Fyffes combination is in a range of $15.46 to $20.01 per share and “provides for substantial upside for all shareholders,” he said.
The sweetened bid is the latest twist in a corporate tussle that began in March, when Chiquita and Fyffes announced a merger that would create the world’s largest banana company, leapfrogging Dole. The Brazilian companies made their first unsolicited bid in August, offering $13 per share.
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Chiquita shares closed up 5 percent at $13.83 Wednesday.
The increased bid from the Brazilian firms was expected but “somewhat disappointing” because it only raised the total value of the offer by $47 million, Kim Noland, director of high yield research at bond research firm Gimme Credit, wrote in a report Wednesday.
The bid “needed to be convincingly higher to assure a victory over the Fyffes deal,” Noland wrote.
Chiquita shareholders are set to vote on the Fyffes deal on Oct. 24 in Charlotte. The two companies are trying to complete their all-stock deal by the end of the year, even as the two Brazilian companies are trying to break up the merger and buy Chiquita themselves.
Chiquita and Fyffes enhanced the terms of their proposed merger last month in an attempt to woo shareholders. Under their revised agreement, the companies said Chiquita shareholders would get almost 60 percent of the stock in the combined company, to be known as ChiquitaFyffes. That’s up from just over 50 percent in the previous agreement.
ChiquitaFyffes would be based in Dublin. Company executives have said most of the 320 workers Chiquita employs at its headquarters in Charlotte’s NASCAR Plaza would stay. Cutrale and Safra haven’t disclosed any plans for the Charlotte headquarters.
Chiquita and Fyffes have said that they plan to save $60 million a year by combining their operations, especially sourcing and logistics.
Shareholders to vote
Chiquita was lured to Charlotte in 2011 with about $22 million worth of state and local incentives tied to the company’s job creation. State and local officials haven’t said what would happen to the incentives if the iconic banana producer moves to Ireland.
Moving Chiquita’s headquarters to Ireland offers potential future tax savings. Although Chiquita has said that’s not a primary driver of the combination, Cutrale and Safra have said the ChiquitaFyffes deal could be blocked amid a rising wave of political opposition to such “inversion” deals.
So far, Chiquita has racked up approvals from the European Union and American regulators.
The Brazilian companies forced Chiquita to delay its shareholder vote until Oct. 24 and launch negotiations, but Chiquita’s board has continued to support the Fyffes deal.
If Chiquita can’t win shareholder support, Fyffes is entitled to walk away. And if Chiquita enters into any other deals after that within nine months, the company would have to pay Fyffes a breakup fee.
The Chiquita takeover fight is one of two battles raging over prominent local companies. Matthews-based Family Dollar is trying to fend off a hostile bid from rival Dollar General. Family Dollar is trying to convince its shareholders that it should instead be acquired by Dollar Tree. Staff writer Ely Portillo contributed.