Less than three years after Chiquita Brands International announced with much fanfare that it would move to Charlotte, the banana giant’s future is set to be decided Friday as shareholders vote on whether to merge with an Irish produce company.
It’s still unclear whether shareholders will vote for an all-stock merger with Dublin-based Fyffes or break up the deal in favor of a competing all-cash offer from two Brazilian firms.
Chiquita’s five largest shareholders, which together own a third of the company’s shares, declined to say how they will vote or did not respond to requests for comment Wednesday.
Whichever way shareholders vote, the decision could mean the end of Chiquita being headquartered in Charlotte. If the shareholders approve the Fyffes deal, the resulting company would be headquartered in Ireland, though executives say most of the roughly 320 people who work in Charlotte would remain.
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If shareholders vote down the Fyffes deal, Chiquita will be left with an unsolicited offer from Brazilian orange juice-maker Cutrale and banking conglomerate Safra to buy the company for $14 a share. That’s a premium to Chiquita’s Wednesday closing price of $12.74 a share.
Cutrale and Safra, which have extensive operations in Florida and Brazil, haven’t said what they would do with Chiquita’s Charlotte headquarters.
Chiquita’s board of directors has fought the offer from Cutrale and Safra for months, however, because they say it undervalues the company. The fight has turned into a bitter war of words, with Chiquita and the Brazilian firms accusing each other of trying to get the best of shareholders.
Cutrale and Safra have said Chiquita is “trying to hoodwink” shareholders and called the company’s efforts to win support for the Irish deal an “attempt to persuade Chiquita shareholders to believe in (a) mythical pot of gold at the end of the rainbow.”
Chiquita CEO Ed Lonergan shot back this week: “Cutrale/Safra appears only interested in acquiring Chiquita for the lowest possible price without adequately compensating Chiquita shareholders.”
Two of the biggest shareholder advisory firms are also divided. Institutional Shareholder Services is telling its clients to vote for the Fyffes deal, while Glass Lewis is telling shareholders to vote the deal down. Big institutional investors rely on such firms for help deciding which way to vote in mergers and other corporate actions.
One shareholder, Wynnefield Capital, has said it supports the offer from Cutrale and Safra and rejected the Fyffes deal. Wynnefield, which owns 3.5 percent of Chiquita shares, called Chiquita’s attempts to complete the Fyffes deal a “desperate effort.”
The special meeting is set for 9 a.m. at Chiquita’s uptown headquarters, in the NASCAR Plaza building next to the NASCAR Hall of Fame. Most shareholders will have already voted by proxy, either online, by phone or through the mail.
Change of direction for Chiquita
Friday’s vote is a dramatic change of course for a company that was widely feted in November 2011, when Chiquita announced its plans to relocate from Cincinnati. Local and state government officials hailed the company, lured by the appeal of a bigger airport and almost $23 million worth of incentives, and held a ceremony when Chiquita unveiled its blue and yellow logo atop the NASCAR tower.
But since then, Chiquita has struggled with sagging earnings and sales, dogged by a glut of bananas on the world market and stagnant salad sales. The company lost $405 million in 2012 and $16 million in 2013. Former CEO Fernando Aguirre, an avid Twitter user who led the move to Charlotte, was replaced by Lonergan in 2012, a turnaround specialist charged with cutting costs and simplifying the business.
Chiquita decided the best strategy was to no longer be an independent company. In March, Chiquita announced it would combine with Fyffes and create ChiquitaFyffes, the largest banana company in the world.
But in August, Cutrale and Safra made an unsolicited offer to break up the Fyffes deal and buy Chiquita for $13 a share. When Chiquita’s board of directors rejected that deal, Cutrale and Safra launched a fight to win shareholder support and force the banana company to delay its shareholder meeting and negotiate.
Meanwhile, Chiquita and Fyffes sweetened their deal, hoping to entice Chiquita shareholders. The companies announced they had found an additional $20 million worth of synergies, boosting the value of the deal, and that Chiquita shareholders would get 60 percent of the combined company’s equity, up from just over 50 percent.
Last week, Cutrale and Safra increased their bid to $14 a share, for a total of about $660 million. But Chiquita’s board rejected their second offer, setting the stage for Friday’s vote.
Although on a smaller scale, the duel over Chiquita is reminiscent of the 2001 battle between First Union and SunTrust over which bank would get to buy Wachovia. At a historic shareholder meeting in Winston-Salem, Wachovia stockholders approved a merger with Charlotte-based First Union, and Atlanta-based SunTrust conceded defeat.
And the fight over Chiquita isn’t the only corporate contest over a local company. Matthews-based Family Dollar, founded in Charlotte in 1959, is also the subject of a fight between rival firms. The company is trying to complete a deal in which Dollar Tree would buy it for $8.5 billion worth of cash and stock.
But Dollar General has made a hostile $9.1 billion all-cash bid to buy Family Dollar itself. Shareholders will have the chance to vote on the deals, though Family Dollar hasn’t set a date for the meeting. Observer Staff Writer Rick Rothacker contributed