A shareholder vote Friday on whether Charlotte-based Chiquita Brands International should merge with Irish produce company Fyffes could be a tossup, with two Brazilian firms sweetening their competing offer and a leading advisory firm waffling in its recommendation.
The vote, set for 9 a.m. at Chiquita’s headquarters in the NASCAR Plaza office tower, could determine Chiquita’s future. Shareholders are deciding between the all-stock ChiquitaFyffes deal and a competing, unsolicited, all-cash offer from Brazilian orange juice maker Cutrale and banking conglomerate Safra Group.
The Brazilians’ offer had been at $14 a share. But in a letter to Chiquita’s board of directors Thursday, Cutrale and Safra increased their offer by 50 cents a share and said the $14.50 per share offer should be compelling. The new offer would value Chiquita at about $681 million, up from $660 million at the previous price.
Chiquita’s board has twice rejected offers from Cutrale and Safra, first at $13 and then at $14 a share. The board instead wants to complete a planned all-stock merger with Dublin-based produce company Fyffes, which would create the world’s largest banana company. ChiquitaFyffes would be based in Dublin, but executives have said most of the 320 or so uptown Charlotte workers would remain.
Major shareholder advisory firms, which institutional investors typically rely on for help deciding how to vote on mergers, have been divided. Institutional Shareholder Services initially didn’t support the Fyffes deal but switched its recommendation on Monday and told clients they should vote for Fyffes. Another advisory firm, Glass Lewis, told clients they should vote down the deal.
But in an 11th-hour change Thursday, ISS said Cutrale and Safra’s new $14.50 offer could be attractive enough to persuade some shareholders.
“The marginal 3.6 percent bump in Cutrale/Safra’s offer may just have cleared the threshold for some investors,” ISS wrote in a note to clients. ISS said that if ChiquitaFyffes falls even slightly short of management’s estimates, its stock would be worth less than the offer from Cutrale and Safra.
ISS stopped short of actually changing its recommendation, however, noting that the new offer came so close to the meeting and deciding how to vote is “a deliberative process which requires more than a few hours notice.” ISS did recommend that its clients check to make sure their votes are counted if they change their votes. The group’s note was titled “What’s the last minute for if you’re never going to use it?”
A Chiquita spokesman did not immediately respond to a request for comment.
Cutrale and Safra held up the ISS note as a major victory. “The alert just issued by Institutional Shareholder Services goes as far as it possibly can given the constraints of time to enable ISS clients to change their votes,” the companies said in a statement.
If Chiquita shareholders approve the company’s merger plan with Fyffes on Friday, the Brazilian firms’ offer to buy Chiquita will be withdrawn, according to Cutrale and Safra. If Chiquita shareholders vote down the Fyffes plan, then the offer from Cutrale and Safra will remain on the table at least through Monday.
Chiquita’s board has said the offer from Cutrale and Safra undervalues the company and that ChiquitaFyffes stock would be worth more than the Brazilian companies have offered to pay.
On Thursday, Chiquita’s stock jumped $1.02 , or 8 percent, rising to $13.76 a share.