Chiquita delays merger vote, will talk with possible Brazilian buyer

Chiquita Brands International said Monday it has postponed a vote on a possible merger of the Charlotte-based company with an Irish produce firm so Chiquita can entertain another offer from a Brazilian group.

The Brazilian companies quickly criticized the move by Chiquita, saying it created an “unreasonably compressed” timeline for them to submit their offer. The Brazilian companies also accused Chiquita’s board of an “attempt to portray” that its board was open to considering their offer.

The move by Chiquita shifts a special shareholders meeting that was scheduled for Sept. 17 in Charlotte to Oct. 3. That meeting had been called for a vote on the possible merger with Dublin-based Fyffes.

The postponement announcement comes less than a week after two influential shareholder-advisory groups recommended that Chiquita shareholders vote against the merger.

On Monday, Chiquita officials said Fyffes has given the Charlotte company permission to “engage in discussions” with the Cutrale/Safra Group, a Brazilian organization seeking a cash buyout of Chiquita.

Chiquita said it has sent Cutrale and Safra a letter saying it was willing to let the companies submit their “best and final” proposal.

In a statement, Cutrale and Safra said Chiquita’s offer includes “wholly unrealistic conditions.”

Chiquita has made Sept. 16 the deadline for Cutrale and Safra to submit their final proposal, “only eight days from now,” the statement says.

Cutrale and Safra also said Chiquita wants them to sign a confidentiality agreement that could prevent the Brazilian companies from soliciting permission to vote on behalf of other shareholders against the Fyffes merger at the Oct. 3 meeting.

“The conditions and timeline laid out by Chiquita for Cutrale-Safra are absurd and totally unacceptable,” the Brazilian companies said.

Cutrale and Safra said they could provide Chiquita with a “firm” offer if given “reasonable terms” from Chiquita’s board.

The negotiations could have a big impact on Charlotte.

Chiquita employs more than 300 people uptown. Chiquita and Fyffes have said previously that their merger would result in most of Chiquita’s corporate jobs remaining in Charlotte. The Brazilian group has not said what would happen to Charlotte jobs under the proposed deal.

Under the all-stock deal with Fyffes announced in March, Chiquita shareholders would receive more than 50 percent of the combined company’s stock. The Brazilian companies have offered to buy Chiquita for $13 a share, or $611 million, in a deal announced in August.

In August, Chiquita’s board rejected the Brazilian companies’ offer, which Chiquita has said undervalues the company. Chiquita has said a merger with Fyffes creates more long-term value. Chiquita and Fyffes continue to recommend that shareholders for both companies vote for the merger.

The postponement of the shareholders meeting follows recommendations made last week by shareholder advisers Institutional Shareholder Services and Glass Lewis & Co., who both urged Chiquita investors to vote against the merger.

The advisers based their recommendations on a variety of factors, including a decline in Chiquita’s share price since the Fyffes merger was announced. That decline, the advisers said, is evidence that investors have soured on the deal.

“Chiquita finally gave up in the face of shareholder and independent shareholder services opposition: it will give Cutrale/Safra an opportunity to engage in discussions and present a final offer,” Gimme Credit, a corporate bond-research firm, wrote in a note Monday.

Brett Hundley of BB&T Capital Markets said the Brazilian companies will have to raise their offer to at least $15 a share for Chiquita’s board to seriously consider it.

“We think that $16 or $17 is more appropriate based upon the value that can likely be created with Fyffes,” he said. “But I think that a $15 bid would make things interesting. I think that, at $15, the Chiquita management team and board would have to think very hard about that offer.”

He added: “Aside from additional cost savings, I’m not so sure there’s much Chiquita and Fyffes can do to make their deal more attractive.”

Also Monday, Chiquita said it has extended its employment agreement with CEO Ed Lonergan for another year, “to ensure the continuity of the business in light of this period of uncertainty.” Lonergan was paid $1.6 million in 2013. His term as CEO is now set to expire on Oct. 8, 2015.

Chiquita shares fell Monday more than 1 percent to $13.60. Staff writer Steve Lyttle contributed.

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