Chiquita Brands International shareholders, set to vote on a proposed merger with Irish fruit company Fyffes, now have competing recommendations on what they should do when they meet Friday in Charlotte.
California-based Glass Lewis & Co. on Tuesday reaffirmed its September recommendation that shareholders reject the proposed merger that would create the world’s largest banana company, ChiquitaFyffes.
Another advisory firm, Institutional Shareholder Services, changed its own recommendation this week, advising shareholders to support the Fyffes deal and reject an all-cash buyout from two Brazilian companies, orange juice maker Cutrale and Safra, a banking conglomerate.
Maryland-based ISS initially discouraged Chiquita shareholders from striking a deal with Fyffes but reversed course after Chiquita took steps to make the Fyffes deal more attractive.
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Under those renegotiated terms, Chiquita shareholders would get almost 60 percent of the stock in ChiquitaFyffes – up from just over 50 percent in the previous agreement. That prompted ISS to conclude that a deal with Fyffes held more long-term financial benefit for Chiquita shareholders.
Cutrale-Safra upped its offer to purchase Chiquita to $14 per share, or $658 million, last week after making an initial $13-per-share bid in August. Chiquita’s board rejected the sweetened offer within a day.
Instead, Chiquita took steps to make the Fyffes deal more attractive – efforts that swayed ISS.
In its Tuesday report, Glass Lewis notes a “pervasive disparity” between the Chiquita board’s presentation of value and the actual value of Chiquita in the market. What’s more, the firm blasts the Fyffes deal for “a lack of clearly attractive financial terms” and questions whether the revised Fyffes deal is preventing shareholders from exploring alternatives.
Chiquita fired back, criticizing Glass Lewis for failing to recognize the value of an updated deal with Fyffes.
“Cutrale/Safra appears only interested in acquiring Chiquita for the lowest possible price without adequately compensating Chiquita shareholders,” Chiquita President Ed Lonergan said in a statement.
Cutrale-Safra has vocally opposed the proposed merger, accusing board members of deceiving and misleading shareholders about details of the proposed buyout and predicting Chiquita stock prices will continue to fall if its deal is not accepted.
Recommendations from proxy advisers can influence shareholder votes. Institutional investors seek the recommendations of proxy advisers on a range of issues, from mergers and acquisitions to executive compensation.
ChiquitaFyffes would be based in Dublin, although company executives have said most of the 320 workers Chiquita employs at its headquarters in Charlotte’s NASCAR Plaza would stay. The Brazilian companies have declined to comment on plans for the Charlotte headquarters.