Fyffes sweetens bid for Chiquita to head off Cutrale/Safra challenge

September 26, 2014, 10:04 AM UTC
Chiquita Brands International Inc Produce Ahead Of Earns
Chiquita Brands International Inc. bananas are arranged for a photograph at Union Street Produce Co. in San Francisco, California, U.S., on Tuesday, Feb. 19, 2013. Chiquita Brands International Inc. is expected to release quarterly earnings data on Feb. 21. Photographer: David Paul Morris/Bloomberg via Getty Images
Bloomberg—Getty Images

The big banana ballyhoo is back on.

Chiquita Brands International (CQB)=and Fyffes Plc Friday published new terms for their proposed merger, offering Chiquita shareholders almost 10% more of the combined company, which would be the biggest distributor of the $7 billion global banana market, with a market share of 14%, according to Merrion stockbrokers.

Under the revised terms, approved by both boards, Chiquita shareholders would get 59.6% of the new company, instead of the 50.7% outlined in their original proposals in August.

The boards are hoping that will be enough to end the interest from juice maker Cutrale Group and Brazilian investment firm Safra Group, which had made an unsolicited offer for Chiquita higher than Fyffes’ original one.

“The new terms…should entice Chiquita shareholders who were leaning towards a cash offer from Cutrale to become more interested in owning an increased proportion of ChiquitaFyffes,” Merrion analysts wrote in a note to clients.

In another sign that Chiquita management is trying to lock in the Fyffes deal, the companies said Friday that they had agreed to pay Fyffes’ a higher termination fee worth 3.5% of Chiquita’s market value, if the deal fails to go through by Oct. 24.

The companies say they could save around $60 million a year from 2016 after the merger, but outside focus on the deal has been on the antitrust implications and, as so often, this year, the tax aspect.

The new company would be headquartered at Fyffes’ historical base in Ireland, effectively making it another ‘tax inversion’ merger of the kind that the Obama administration clamped down on earlier this week.

The deal has already been cleared by U.S. antitrust authorities and the companies expect to get conditional approval from the E.U. next week, Reuters reported earlier this week.