Chiquita may be the biggest name in the banana market, but surprisingly, it isn’t the top supplier of the fruit. Or, at least, it wasn’t until today.
Chiquita Brands International has agreed to buy Fyffes Plc, a Dublin-based fruit distributor, for about $565 million, according to a Chiquita and Fyffes joint company statement released Monday. The merger will bring together two of the world’s oldest fruit importers.
Pending approval, the deal will be a boon for investors as well: Fyffes shareholders will get 0.1567 shares of the new company for every one share they own of Fyffles, and Chiquita shareholders will get one share of the new company for each Chiquita share. Shares of both companies surged: Fyffes rose 44 percent in Dublin trading, while shares for Charlotte, N.C.-based Chiquita jumped 14 percent in the morning before leveling off later Monday. It closed up 10.7 percent at $12 a share.
The new company will be called ChiquitaFyffes and be worth an estimated $1.7 billion. It will be listed on the New York Stock Exchange, but operations will be based in Ireland. Chiquita shareholders will own 50.7 percent of the new company, with Fyffes shareholders owning the remaining 49.3 percent.
"This deal will be transformative and offer exciting opportunities for the new business. We are looking forward to working with the Chiquita team to build a combined company which is well positioned to succeed in our highly competitive marketplace and which will create significant value for our shareholders," Fyffes Executive Chairman David Cann said in the companies’ joint press statement. “We believe we will be able to use our joint expertise, complementary assets and geographic coverage to develop a business that can run smoothly and efficiently to better partner with our customers and suppliers."
Chiquita employs approximately 20,000 workers; Fyffes has about 12,000 workers.
According to the two companies, the merger will create a company grossing $4.6 billion in annual revenue. The merger should be completed by the end of 2014. The deal puts ChiquitaFyffes well ahead of Dole and Del Monte, its chief competitors in the banana distribution market. The new company moves a combined 180 million boxes of bananas per year, while Del Monte and Dole sell 117 million and 110 million, respectively.
Chiquita and Fyffes are both very well-known brands, albeit to different groups of people. Chiquita, formerly known as the United Fruit Company, was founded in 1863 and is the chief banana distributor for the United States. It has a checkered history, fraught with accusations of human rights violations and bribery scandals. In 2010, the company reached a multimillion-dollar settlement with the US federal government over allegations that it had financial ties to Colombian paramilitary groups.
Fyffes also began in the 1870s, as a group of banana plantations in the Virgin Islands, and is one of the largest tropical fruit importers in Europe. The company was linked to an insider trading scandal in 2008.