Chiquita clearing hurdles on Fyffes merger

by Monica Watrous    View Me on Google+
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In addition to expanding Chiquita’s capabilities and offerings, the proposed partnership would better position the company to weather-related risks.

CHARLOTTE, N.C. — Chiquita Brands International, Inc. said its proposed merger with Fyffes is on track, pending two key milestones. Before the company may combine with the Dublin, Ireland-based fruit and produce distributor, shareholders must vote in favor of the plan on Sept. 17, and the combination must gain regulatory approval in Europe.

“And beyond that, we have satisfied the hurdles that we needed to satisfy when we announced in March,” said Ed Lonergan, president and chief executive officer, during an Aug. 7 earnings call with analysts. “We are well in progress with the European Commission, and as we have said before, we still feel confident that we’ll close by the end of the year.”

The strategic partnership would create the world’s largest banana company with about $4.6 billion in annual sales.

In addition to expanding Chiquita’s capabilities and offerings, the combination would better position the company to weather-related risks.

“We think that by bringing the two companies together, if you think about the breadth of portfolio between the two businesses, with a substantial position in pineapples, a substantial position in melons, a substantial position in U.S. and European banana and banana-like products, and a portfolio that ranges from private label to the best quality branded product that you can find, there really isn't anything that a customer could ask for in this space that we couldn't deliver, as a combined company,” Mr. Lonergan said. “And I couldn't say that today, yet, for Chiquita. We are heading in that direction. As we’ve talked to you in the last calls, we’ve moved beyond selling just Chiquita-branded bananas, and just Fresh Express-branded salads to include private label, and organics, and over time, additional products, but this just speeds that process.”

If the merger does not gain necessary approvals, Mr. Lonergan said Chiquita’s backup plan is to remain a standalone company.

“And frankly, we’re quite comfortable in that plan,” Mr. Lonergan said. “The reason we chose to progress with the Fyffes merger is we think that it’s plan-plus.”

For the second quarter ended June 30, Chiquita earned $18 million, equal to 38c per share on the common stock, down from $31 million, or 67c per share, in the comparable period.

Net sales climbed to $716 million from $693 million.
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