US fresh produce company Chiquita Brands International has announced that it has entered into a definitive agreement to acquire the Fresh Express unit of Performance Food Group for US$855m in cash.

Fresh Express sells packaged salads in the US, where it has a 40% retail market share and approximately $1bn in revenues. With this acquisition, Chiquita will become the leader in the fast-growing value-added salads category. In addition to its salad products, Fresh Express supplies fresh-cut fruit. The transaction is expected to close in the second quarter of 2005.

"I believe this is the most important strategic and transformational move the company has made in decades," said Fernando Aguirre, chairman and chief executive officer of Chiquita Brands International.

Chiquita said the acquisition would create a much more balanced company. In the combined company, Europe and North America will generate 55% and 44% of total revenues, respectively, whereas currently 72% of Chiquita's revenues come from Europe.

"With a more balanced mix of earnings between Europe and North America and less dependence on bananas, we will be less susceptible to the risks inherent in our European business, such as pending changes to the EU banana import regime and foreign exchange," Aguirre said.

The company expects to promptly convert all fruit-based products to the Chiquita brand and retain the Fresh Express brand for value-added salads.

Separately Chiquita reported fourth quarter 2004 net income of $25m, or 61 cents per share, compared to net income of $8m, or 19 cents per share, in the same period a year ago. Net sales were $768m, up 12% from $686m in the fourth quarter of 2003.  The increase resulted from favourable European exchange rates, improved banana pricing in Europe, higher banana volume in North America and higher sales of other fresh produce.

"We made significant progress in 2004 and achieved the best fourth quarter results in years," said Aguirre.